Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors. - Court Judgment

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			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
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			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
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			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
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			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
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		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
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		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
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		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
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		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
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			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
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		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
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		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
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               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
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		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
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		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
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			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
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			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
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			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
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		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
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			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
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			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
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		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
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		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
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		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
		'link' => null,
		'circuit' => null
	)
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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
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			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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6. These show-cause notices are challenged by the petitioners-company on various grounds :

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers;

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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(ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers;

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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(iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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(iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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(iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.)

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows :

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.'

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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14. The questions for determination which arise in this case therefore, are :

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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(ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value;

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)]

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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17. Section 4, 4(d) defines what is the value in relation to any excisable goods.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
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			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
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			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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'(d) value in relation to any excisable goods;

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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(i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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19. The next case relied upon Sri Bhat is :

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
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			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c).

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows :

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29)

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal.

Notice (8): Undefined variable: query [APP/View/Case/amp.ctp, line 144]
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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.)

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
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$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
)
$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
)
$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
)
$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
)
$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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35. For the reasons aforementioned, the show-cause notices are upheld.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
)
$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
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		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
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		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.

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	'title_for_layout' => 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '375209',
			'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
			'appealno' => 'Writ Petition No. 18198 of 1979',
			'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
			'authreffered' => '',
			'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
			'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
			'caseanalysis' => null,
			'casesref' => '',
			'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
			'counselplain' => 'S.G. Sundara Swamy, Adv.',
			'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
			'court' => 'Karnataka',
			'court_type' => 'HC',
			'decidedon' => '1986-01-03',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'S.R. Rajasekhara Murthy, J.',
			'judgement' => '<p style="text-align: justify;">1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p style="text-align: justify;">2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p style="text-align: justify;">3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p style="text-align: justify;">4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p style="text-align: justify;">5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p style="text-align: justify;">6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p style="text-align: justify;">(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p style="text-align: justify;"> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p style="text-align: justify;"> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p style="text-align: justify;"> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p style="text-align: justify;">7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p style="text-align: justify;">8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p style="text-align: justify;">(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p style="text-align: justify;"> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p style="text-align: justify;">for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p style="text-align: justify;">9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p style="text-align: justify;">10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p style="text-align: justify;">11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p style="text-align: justify;">'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p style="text-align: justify;"> (underlining by me)</p><p style="text-align: justify;">Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p style="text-align: justify;">12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p style="text-align: justify;">13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p style="text-align: justify;">14. The questions for determination which arise in this case therefore, are : </p><p style="text-align: justify;">(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p style="text-align: justify;"> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p style="text-align: justify;">Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p style="text-align: justify;">15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p style="text-align: justify;">16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p style="text-align: justify;">17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p style="text-align: justify;">'(d) value in relation to any excisable goods; </p><p style="text-align: justify;"> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p style="text-align: justify;"> (underlining is mine)</p><p style="text-align: justify;">18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p style="text-align: justify;">18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p style="text-align: justify;">19. The next case relied upon Sri Bhat is : </p><p style="text-align: justify;">Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p style="text-align: justify;">20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p style="text-align: justify;">21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p style="text-align: justify;">22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p style="text-align: justify;">'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p style="text-align: justify;"> (underlining mine)</p><p style="text-align: justify;">23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p style="text-align: justify;">24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p style="text-align: justify;">25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p style="text-align: justify;">26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p style="text-align: justify;">27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p style="text-align: justify;">28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p style="text-align: justify;">29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p style="text-align: justify;">30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p style="text-align: justify;">31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p style="text-align: justify;">32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p style="text-align: justify;">33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p style="text-align: justify;">34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p style="text-align: justify;">35. For the reasons aforementioned, the show-cause notices are upheld. </p><p style="text-align: justify;">36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
			'ratiodecidendi' => '',
			'respondent' => 'Collector of Central Excise, Bangalore and ors.',
			'sub' => 'Excise',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore',
	'args' => array(
		(int) 0 => '375209',
		(int) 1 => 'bengal-electric-lamps-works-ltd-vs-collector-bangalore'
	)
)
$title_for_layout = 'Bengal Electric Lamps Works Ltd and anr Vs Collector of Central Excise Bangalore and ors - Citation 375209 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '375209',
		'acts' => 'Central Excise Rules, 1944 - Rules 10, 10(1), 173J and 173Q; <a href="/act/51721/central-excise-act-1944-complete-act">Central Excise Act, 1944</a> - Sections 4 and 4(1)',
		'appealno' => 'Writ Petition No. 18198 of 1979',
		'appellant' => 'Bengal Electric Lamps Works Ltd. and anr.',
		'authreffered' => '',
		'casename' => 'Bengal Electric Lamps Works Ltd. and anr. Vs. Collector of Central Excise, Bangalore and ors.',
		'casenote' => 'Central excise - Jurisdiction--Short-levy--Notice--Valuation--Approval of price list--Price list disclosing 60% trade discount allowed to wholesale dealers--Search and seizure--Seizure of documents showing discount was not fully passed on but was received back--Issue of show cause notice to reopen assessment and to disallow discount--Writ petition challenging notice--Department had jurisdiction to issue notice--Prima facie case made out to invoke Rule 10A--Petition not maintainable--Central Excise Rules, 1944, Rules 5, 10A, 173J--Central Excises and Salt Act (1 of 1944), Section 4(4)(d)--Constitution of India, Article 226. - CODE OF CRIMINAL PROCEDURE, 1973 [C.A. No. 2/1974]. Section 125: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under this section, in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956. 
HINDU ADOPTIONS AND MAINTENANCE ACT,1956[C.A.No.78/1956] -- Section 19: [K.L. Manjunath, J] Claim for maintenance  Held, Widowed daughter-in-law and her minor daughter cannot claim maintenance from her in laws under Section 125 of Cr.P.C., in view of specific provisions under Section 19 of the Hindu Adoption & maintenance Act, 1956.  -  4. Certain incriminating documents like debit notes etc. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co.',
		'caseanalysis' => null,
		'casesref' => '',
		'citingcases' => '                       (underlining by me);(i)            XX                 XX                  XX
               XX                 XX                  XX;                          (underlining is mine);                       (underlining mine)',
		'counselplain' => 'S.G. Sundara Swamy, Adv.',
		'counseldef' => 'K. Shivashankar Bhat, Sr. Central Government Standing Counsel',
		'court' => 'Karnataka',
		'court_type' => 'HC',
		'decidedon' => '1986-01-03',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'S.R. Rajasekhara Murthy, J.',
		'judgement' => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. </p><p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. </p><p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. </p><p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. </p><p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. </p><p>6. These show-cause notices are challenged by the petitioners-company on various grounds : </p><p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; </p><p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; </p><p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and </p><p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. </p><p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. </p><p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. </p><p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and </p><p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) </p><p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. </p><p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. </p><p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. </p><p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : </p><p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' </p><p> (underlining by me)</p><p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. </p><p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. </p><p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. </p><p>14. The questions for determination which arise in this case therefore, are : </p><p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and </p><p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; </p><p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.</p><p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] </p><p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. </p><p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. </p><p>'(d) value in relation to any excisable goods; </p><p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. </p><p> (underlining is mine)</p><p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. </p><p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. </p><p>19. The next case relied upon Sri Bhat is : </p><p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. </p><p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). </p><p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. </p><p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : </p><p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) </p><p> (underlining mine)</p><p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. </p><p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. </p><p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. </p><p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. </p><p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. </p><p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. </p><p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. </p><p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) </p><p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. </p><p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. </p><p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. </p><p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. </p><p>35. For the reasons aforementioned, the show-cause notices are upheld. </p><p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '1986(9)ECC216; 1986(25)ELT38(Kar)',
		'ratiodecidendi' => '',
		'respondent' => 'Collector of Central Excise, Bangalore and ors.',
		'sub' => 'Excise',
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	(int) 0 => '<p>1. The two show-cause notices issued by the Asstt. Collector of Central Excise, Bangalore on 21.7.1977 and 17.7.1979 are challenged in this writ petition by the petitioner, which is a Company registered under the Companies Act, 1956. ',
	(int) 1 => '<p>2. The first petitioner is a manufacturer of electric bulbs, fluorescent tubes in its two factories - one in Calcutta and another in Bangalore. The goods manufactured by the petitioners are dutiable under Entry 32 of first schedule to the Central Excise Act. The products are sold to various wholesale dealers appointed at different places in the country. Supplies were made to the wholesale dealers after deducting a uniform 'discount' of 50% of the list price. ',
	(int) 2 => '<p>3. For the period commencing from 15.10.1973 upto 15.1.1974 the price list No. 1/74 to be effective from 15.1.1974 was approved by the department and assessments were finalised. The discount which was allowed to the dealers was disclosed as 50% of the list price. The price list filed upto 15.9.1975 on the same basis were also approved. ',
	(int) 3 => '<p>4. Certain incriminating documents like debit notes etc., were seized from the business premises of the petitioner at Bangalore. On a consideration of several documents seized and on the basis of statements of several wholesale dealers recorded, it was detected by the department that the discount stated to have been allowed to the wholesale dealers was not passed on to them in full and was subsequently received back by raising debit notes. ',
	(int) 4 => '<p>5. The two notices impugned in this writ petition were thereafter issued by the Asstt. Collector of Central Excise calling upon the petitioners to show cause why the trade discounts which had been allowed should not be disallowed and the assessable value of the goods removed on the basis of the price list approved, should not be re-determined and the differential duty levied in accordance with law. ',
	(int) 5 => '<p>6. These show-cause notices are challenged by the petitioners-company on various grounds : ',
	(int) 6 => '<p>(i) that the impugned notices were issued under a misconception of facts and the law relating to the whole-sale cash charged by the petitioner-company, to its dealers; ',
	(int) 7 => '<p> (ii) the authorities under the Act erred in treating the debits as part of the price, whereas it was charged for various services rendered to its customers; ',
	(int) 8 => '<p> (iii) that the notices are illegal since they were issued beyond six months as prescribed under Rule 10, or at any rate, within one year read with under Rule 173 J of the Central Excise Rules; and ',
	(int) 9 => '<p> (iv) that Rule 10A does not apply to the petitioners case even conceding it was a 'misstatement' within its meaning in Rule 10. ',
	(int) 10 => '<p>7. In support of the petitioner's contentions large number of decisions have been cited before me by Sri Sundaraswamy, learned Senior Counsel. He has also demonstrated with reference to the documents filed, such as, the price list, answers furnished to the questionnaire, etc., before the list was approved and the memorandum of approval issued by the Department as required under the Rules to show that there was no misrepresentation or misstatement of facts. ',
	(int) 11 => '<p>8. Sri Sundaraswamy has relied upon the decision of the Supreme Court in Sanjana v. Elphinstone - - [1971 Supreme Court 2039 = 1978 ELT (J 399) (S.C.)], which explains the scope of Rules 10 and 10A. ',
	(int) 12 => '<p>(ii) Inspector, Central Excise, v. Bengal Paper Mills CO. Ltd. [1978 ELT (J 515) (CALCUTTA) = 1983 ELT 744 (Guj.)], and ',
	(int) 13 => '<p> (iii) 1983 ECR 717 (Gujarat) (M/s. Steadfast Paper Mills v. Shri D.R. Kohli, the former Collector of Cent. Excise & Ors.) ',
	(int) 14 => '<p>for the proposition that any misstatement as to description, quality of value of such goods is also covered by Rule 10, and not by Rule 10A. Particularly, he relies upon the observation made by Calcutta High Court in Bengal Paper Mills case and the observations of their Lordships, in para-9, that misstatement in Rule 10 covers both honest and deliberate misstatement. ',
	(int) 15 => '<p>9. Developing his argument on this premises Sri Sundaraswamy has further contended that the discount shown in the price lists was approved by the Department and a memorandum approving the same was issued in prescribed form - R.T. 12 on 31.12.1975. According to his submission, once the memorandum approving the price-list is issued, the limitation of one year runs from that day, to demand any short levy as contemplated under Rule 10 read with Rule 173(J). The show-cause notice dated 21.7.1977 and the second show-cause notice of 17.7.1979 were therefore clearly barred by time and therefore no further proceedings could be continued on the basis of the illegal show-cause notices. It is also urged that the second show-cause of 17.7.79 was only a continuation of the first and hence the it cannot give rise to a fresh cause of action, the basis for issue of both the notices being the same. It was, therefore, urged on behalf of the petitioners that the show-cause notices should be quashed and the department prohibited from re-opening the assessments and the form proceeding to redetermine the assessable value. ',
	(int) 16 => '<p>10. It is argued by Sri Shivashankar Bhat for the respondents that the action taken to re-open the assessment is justified both on facts and in law. ',
	(int) 17 => '<p>11. He relies upon the Central Excise (Valuation) Rules, 1975, under which the value of excisable goods is determined. Rule 5 of the said Rules provides as follows : ',
	(int) 18 => '<p>'5. Where the excisable goods are sold in the circumstances specified in clause (a) of Sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.' ',
	(int) 19 => '<p> (underlining by me)',
	(int) 20 => '<p>Relying on this Rule, Sri Bhut submitted that the information and material collected by the Department and the investigation revealed that what was shown as discount was not really discount since part of it was received back the petitioner-company in the form of debits. ',
	(int) 21 => '<p>12. It is demonstrated by the learned counsel that Ext-A1 shows that 50% on the whole sale cash price was shown as the discount allowed to the wholesalers. Part of it was received back by the petitioners by way of debits representing freight and forwarding charges and other post-manufacturing expenses and for other special services. ',
	(int) 22 => '<p>13. The Department accepted whatever was contained and furnished in Ext. A3. A questionnaire issued by the Department at the time of approving the price-list and the Department proceeded on the basis of the information furnished that 50% trade discount was in fact allowed to its distributors. ',
	(int) 23 => '<p>14. The questions for determination which arise in this case therefore, are : ',
	(int) 24 => '<p>(i) whether there was suppression of material information about the flow-back of the discounts by raising debit notes in favour of the petitioner and ',
	(int) 25 => '<p> (ii) whether trade discounts which were not passed on the dealers in full should be treated as part of the assessable values and the differential duty redetermined on the basis of such assessable value; ',
	(int) 26 => '<p>Dealing with the facts briefly, with the material and the information gathered by the Department, which gave rise to the issue of the show-cause notices, it is argued by Sri Bhat that the whole scheme as disclosed from the incriminating documents seized, was nothing but a camouflage to evade the excise duty on the real assessable value of the excisable goods.',
	(int) 27 => '<p>15. In support of his contention that the flow back of the discount should be added to the assessable value. Sri Bhat relied upon various decisions of the Supreme Court. According to him, the concept of value for purposes of Central Excise Act is now well settled by the Supreme Court in Bombay [Tyre International case (1984 S.C. 420 = 1983 E.L.T. 1896 (S.C.)] ',
	(int) 28 => '<p>16. The Supreme Court was dealing with elaborately with the scope of section 4 after its amendment with effect from October 1, 1975, which provides for the norms to determine the value of excisable goods. ',
	(int) 29 => '<p>17. Section 4, 4(d) defines what is the value in relation to any excisable goods. ',
	(int) 30 => '<p>'(d) value in relation to any excisable goods; ',
	(int) 31 => '<p> (i) XX XX XXXX XX XX (ii) does not include the amount of the duty of excise, sales-tax and other taxes, if any, payable on such goods and subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale'. ',
	(int) 32 => '<p> (underlining is mine)',
	(int) 33 => '<p>18. What is contended by the learned Counsel for the Revenue is that the 'trade discount' referred to in the said clause means the genuine trade discount and not boosted discount shown in the price-list and later indirectly received back by the manufacturer. ',
	(int) 34 => '<p>18. Relying upon the observations made by the Supreme Court in the said judgment, it is submitted, that the discount which was indirectly received back by the petitioner by way of debit notes was sought to be added to the assessable value and the show-cause notices issued for this purpose, should be sustained. ',
	(int) 35 => '<p>19. The next case relied upon Sri Bhat is : ',
	(int) 36 => '<p>Coramandel Fertilisers (1974 S.C. 1772) regarding 'trade discount'. The question was whether the commission paid to the selling agent is not a trade discount He also relied on the decision of the Andhra Pradesh High Court reported in - 1984 (18) ELT 249 [Mopeds India Ltd. v. Asstt. Collector, Central Excise, Nellore Division and Others) on the same point. The High Court held that every kind of discount is not allowable under the Act. ',
	(int) 37 => '<p>20. Regarding the point of limitation raised by the petitioners, Sri Bhat has contended that it is a case of wilful suppression or misstatement which was implicit and covered by Rule 10A before the new Rule 10, was amended and inserted with effect from 6.8.1977 under which an enlarged limitation of five years is provided is Rule 10(1)(c). ',
	(int) 38 => '<p>21. Rule 10 speaks of non-culpable action and Rule 10A deals with culpable actions such as misconduct, deliberate misstatement, suppression, etc. Rule 10 applies only to honest mistakes and cases of wilful mistakes fall under Rule 10A. Therefore, the amended Rule 10 should be made applicable to the facts of the case by implication and the scope of Rule 10A was also the same. ',
	(int) 39 => '<p>22. He has also drew support from the observations made by the Supreme Court on the scope of Rule 10A in Asstt. Collector of Central Excise v. National Tobacco Co., : 1978(2)ELT416(SC) , wherein, it was observed as follows : ',
	(int) 40 => '<p>'Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which, as pointed out in N.B. Sanjana's case : 1973ECR6(SC) (supra) was a change in the law. One could go back still further and come to the conclusion that that real reason for the alleged short levy was a failure of the Co., to supply the fuller information it used to supply and not just a misstatement.' (para-29) ',
	(int) 41 => '<p> (underlining mine)',
	(int) 42 => '<p>23. Sri Bhat further urged that a wilful misstatement falls under Rule 10A and an innocent misstatement made without ulterior motive falls under Rule 10. ',
	(int) 43 => '<p>24. D.R. Kohli v. Atul Products : 1985(20)ELT212(SC) was also referred by Shri Bhat in which the observations made by the Supreme Court earlier in National Tobacco case and Sanjana's case, explaining the scope and ambit of Rule 10 and Rule 10A was reiterated. ',
	(int) 44 => '<p>25. Sri Sundaraswamy, replying to these arguments of Sri Shivashankar Bhat on limitation, argued that what is sought to be done by the department is to revive a dead cause of action. The new Rule 10(1)(c) was inserted with effect from 6.8.1977 and the show-cause notices dated 21.7.1977 and 17.7.1979 were both barred by time and the rules that was applicable was Rule 10 read with Rule 173(j) and 10A before it was substituted with effect from 6.8.1977 and the limitation period of one year should apply to the case. ',
	(int) 45 => '<p>26. In support of his argument he relies upon a decision reported in : [1974]93ITR233(SC) (The C.I.T. Bombay v. O. Meghraj & Others) and also on the provisions of Section 30 of the Limitation Act, which prohibits the application of an amended provision to revive a dead cause of action. ',
	(int) 46 => '<p>27. In AIR 1962 S.C. 918 (ITO v. S. K. Habibulla) cited by the learned Counsel, it was ruled that, vested rights cannot be taken away by amendment to section 35 of the Indian Income-Tax Act 1922, which was only prospective. ',
	(int) 47 => '<p>28. He relied upon a decision reported in AIR 1967 S.C. 1069 for the proposition that the cause of action for limitation is the day on which action is initiated. ',
	(int) 48 => '<p>29. Sri Sundaraswamy has further submitted that since the writ petition has been entertained and 'Rule' is issued, this Court may go into the merits of the case and decide it in the writ petition itself without driving the petitioner to face the enquiry before the department after a lapse of nearly six years and then challenge it in appeal. ',
	(int) 49 => '<p>30. In support of his contention Sri Sundaraswamy has relied upon N. Nagamanicam Setty v. Collector of Central Excise (1983 ELT 2301), wherein the show cause notice was challenged and this Court interfered with the said show cause notice and has relied on a decision reported in 1985 ELT 565 (Madras Rubber Factory Ltd.) ',
	(int) 50 => '<p>31. In reply Sri Bhat contended alternatively that the relief in the writ petition is to quash the two notices, Exts. F and K; - under Ext. F, the second notice, action is proposed not only to collect short levy but also to impose penalty under Rule 173(Q). It is his contention that though the basis for the action is the same, the second show cause notice is independent of the first and the department can proceed to levy penalty for which there is no limitation under the Act or the Rules. His arguments is that on the same finding even if the department may not be able to collect short levy, penalty can be imposed for the alleged contraventions and irregularities detected. This provision corresponds to Section 124A of the Customs Act and that therefore action initiated under the second notice should be upheld as valid in law. ',
	(int) 51 => '<p>32. Sri Bhat has also opposed the contention on behalf of the petitioners that this Court may decide the entire case on its merits since 'Rule' has been issued in the writ petition. Relying upon the decision reported in AIR 1979 Supreme Court 1889 = 1979 E.L.T. (J 511) (S.C.) (The Asstt. Collector of Central Excise v. Jainson Hosiery Industries), Sri Bhat has opposed this request of the petitioners and submits that this Court should not interfere at the stage of investigation and it should be left to the department to make an order on the basis of the material which it has collected in the course of the 'search and seizure' and the order of the adjudicating authority can always be tested in appeals provided under the Act. ',
	(int) 52 => '<p>33. According to Sri Shivashankar Bhat, the modus operandi adopted by the petitioner came to light only when it was detected by the department after certain incriminating documents were seized and scrutinised by the Directorate of Intelligence, New Delhi. The further follow up also revealed that there was a systematic under-valuing of the wholesale cash price received by the petitioner-company from its distributors and that therefore, it is still open to the petitioner to contest the proposed inquiry before the competent authority. Redetermination of the assessable value and the differential duty payable thereon, is yet to be ascertained and the adjudication on these matters has to be done by the competent authority. ',
	(int) 53 => '<p>34. I have carefully considered the arguments advanced by both sides on all the aspects of the case. The scope of this writ petition is very much limited to the question of jurisdiction. The petitioner's attempt has been to bring its case under Rule 10; whereas the Department has relied upon Rule 10A and has sought to justify its action. On a perusal of the record and on a careful scrutiny of the materials relied upon by the Department as is disclosed in the two show cause notices, I am of opinion that the Department has made out a prima facie case to invoke Rule 10A. ',
	(int) 54 => '<p>35. For the reasons aforementioned, the show-cause notices are upheld. ',
	(int) 55 => '<p>36. Without expressing any opinion as to the merits of the case and the contentions urged by both sides, I dismiss the writ petition with a direction to the Department to complete the further proceedings without further delay.<p>',
	(int) 56 => '<p>'
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