National Steel Rolling Mills Vs. Collector of C. Excise - Court Judgment

Excerpt:
1. m/s. national steel rolling mills have filed this appeal against the order of the addl. collector of customs. the addl. collector in his order had held : "i demand from m/s. national steel rolling mills ltd. an amount of rs. 89,715.18 towards basic excise duty and rs. 4,072.34 towards special excise duty (total rs. 93,787.52) on account of wrong availment of proforma credit, which was not admissible during the material period and consequently confirm the duty demand for this amount. i vacate the duty demand for rs. 3,275.30 (basic excise duty 3206.00 and special excise duty 69.30) which had become time barred by the time the demand had been raised." 2. briefly stated the facts of the case are that m /s. national steel rolling mills, the appellant in this case, are manufacturers of iron and steel products and utilised proforma credit of duty paid on inputs.during the period from march, 1988 to february, 1989 they were not entitled to avail proforma credit under rule 56a as this facility was not available on iron and steel products in terms of notification no.84/87-c.e., dated 1-3-1987. a notice demanding duty was accordingly issued on 8-2-1989 asking the appellant to deposit rs. 97,062.22. this demand was confirmed by the asstt. collector. when the matter went in appeal to the collector (appeals), he remanded the case to the asstt.collector for de novo adjudication on the ground that the appellant during appeal had raised two fresh issues on time bar and a declaration having been filed for availing modvat credit which were not discussed by the asstt. collector in his order, the appellant was asked to show cause to the addl. collector by invoking the extended period of time limitation under section 11a of the central excises and salt act and the addl. collector then decided the case as indicated in the preceding paragraph.3. shri k.k. anand, the ld. advocate appearing for the appellant submitted that the impugned order is unsustainable in law having been passed by an officer other than the officer to whom the case was remanded for de novo adjudication. in support of this contention, the ld. advocate relied upon the decision of the tribunal in the case of kay international v. cc reported in 1990 (45) e.l.t. 79 and in the case of associated cement company ltd. v. cce reported in 1989 (41) e.l.t.337; that the case relied upon by the addl. collector has no authority for the de novo proceedings and readjudication of the case and was not applicable to the appellant's case; that the show cause notice only demanded duty amounting to rs. 97,062.82 as wrongly taken credit under section 11a of central excises and salt act without proposing any penal action against the appellant under rule 173q of the central excise rules, 1944; that the charge of suppression of facts, mis-statement and fraud was brought in for the first time against the appellant in the show cause notice issued by the addl. collector; that the power of demanding duty or recovering the amount has been conferred upon the asstt. collector as per the sub-rule (5) of rule 56a and not on the addl. collector; that the appellant has been deprived of one stage of appeal inasmuch as the appeal against the order of asstt. collector lies with the appellate tribunal; that in the appellant's classification list there was a specific mention that the appellant had opted for modvat facility and the declaration to that effect had been submitted; that this endorsement was scored on the advice of the central excise authorities and a new remarks reading as "we are availing proforma credit under rule 56a" was inserted; that from the date of submission of the request the appellant was maintaining records in forms rg 23a pt. i and rg 23a pt.ii showing a detailed account of inputs received, duty paid and the credit of duty taken; that the rg 1 register would show that they were maintaining rg 23a pt. i & ii upto 30-6-1988; that this evidence was sufficient to support their contention that a declation had been filed. summing up his arguments, the ld. advocate submitted that the impugned order of the addl.collector was without authority and illegal, and therefore may be set aside and demand of duty dropped.4. shri b.d. bhagat, the ld. jdr appearing for the respondent submitted that during the material period, the appellant took set off of duty under rule 56a without filing a declaration; that filing of a declaration is a mandatory condition before availing set off under rule 56a of central excise rules, 1944. on the question of assumption of the power of adjudication by the addl. collector when the case was remanded to the asstt. collector for de novo adjudication, the ld. jdr submitted that a senior officer can always assume the powers of the junior officer and therefore under the rules, the addl. collector was perfectly within his rights to adjudicate the case; that before adjudication the appellant was given an opportunity and a notice that the cause should be shown to the addl. collector and not to the asstt.collector was issued. reiterating the findings of the lower authorities, the ld. jdr submitted that the impugned order was valid and legal.5. heard the submissions of both sides and considered them. i find that the collector (appeals) had under order-in-appeal no. 414-ce/chg/89 dated 10-11-1989 ordered : "i have carefully considered the submissions made by the appellant. i find that the appellants have taken a new plea of time bar as well as that of filing declaration on 1-3-1988 at the stage of appeal, which issues are not discussed in the impugned order nor is there any finding of the asstt. collector on such issues. however, since the issue of time bar is a point of law which can be examined only with reference to the actual facts of the case are not discussed in the impugned order, i remand the case back to the asstt. collector for his specific finding on the point of time bar as well as on the other points regarding filing of declaration on 1-3-1988 and for passing a speaking order after observing the principles of natural justice. consequently the impugned order is set aside and the appeal is disposed of by way of remand." the ld. advocate in support of his contention that the case was remanded to the asstt. collector and therefore the addl. collector had no authority to examine the issues set out in the order remanding the case relied on the judgement of the tribunal in the case of kay international v. cc reported in 1990 (45) e.l.t. 79. in this case, the tribunal had held : "we have considered the pleas advanced by both sides. we find substantial force in the various pleas of the ld. advocate for the appellant. the direction for re-adjudication has been made specifically to the addl. collector of customs who had originally adjudicated the case. in the circumstances, we do not see any reason as to why the collector of customs took upon himself to re-adjudicate the case in the face of the specific directions of the order of the tribunal." 6. in the instant case, i find that the direction in the order of remand was to the asstt. collector to examine the two issues namely the question of time bar and the question of filing a declaration on 1-3-1988. it was, therefore, the asstt. collector who was required to examine the issues. agreeing with the ratio of the judgement of the tribunal cited supra, i find that the addl. collector had no jurisdiction in the case to take up the case himself for adjudication, issue a fresh show cause notice adding some more points and therefore the impugned order is not sustainable in law. the impugned order is set aside and the appeal is allowed. however, the order of remand by the collector (appeals) is still valid and has to be decided by the asstt.collector concerned.

Judgment:
1. M/s. National Steel Rolling Mills have filed this appeal against the order of the Addl. Collector of Customs. The Addl. Collector in his order had held : "I demand from M/s. National Steel Rolling Mills Ltd. an amount of Rs. 89,715.18 towards Basic Excise Duty and Rs. 4,072.34 towards Special Excise Duty (Total Rs. 93,787.52) on account of wrong availment of proforma credit, which was not admissible during the material period and consequently confirm the duty demand for this amount.

I vacate the duty demand for Rs. 3,275.30 (Basic Excise Duty 3206.00 and Special Excise Duty 69.30) which had become time barred by the time the demand had been raised." 2. Briefly stated the facts of the case are that M /s. National Steel Rolling Mills, the appellant in this case, are manufacturers of iron and steel products and utilised proforma credit of duty paid on inputs.

During the period from March, 1988 to February, 1989 they were not entitled to avail proforma credit under Rule 56A as this facility was not available on iron and steel products in terms of Notification No.84/87-C.E., dated 1-3-1987. A notice demanding duty was accordingly issued on 8-2-1989 asking the appellant to deposit Rs. 97,062.22. This demand was confirmed by the Asstt. Collector. When the matter went in appeal to the Collector (Appeals), he remanded the case to the Asstt.

Collector for de novo adjudication on the ground that the appellant during appeal had raised two fresh issues on time bar and a declaration having been filed for availing modvat credit which were not discussed by the Asstt. Collector in his order, The appellant was asked to show cause to the Addl. Collector by invoking the extended period of time limitation under Section 11A of the Central Excises and Salt Act and the Addl. Collector then decided the case as indicated in the preceding paragraph.

3. Shri K.K. Anand, the ld. Advocate appearing for the appellant submitted that the impugned order is unsustainable in law having been passed by an officer other than the officer to whom the case was remanded for de novo adjudication. In support of this contention, the ld. Advocate relied upon the decision of the Tribunal in the case of Kay International v. CC reported in 1990 (45) E.L.T. 79 and in the case of Associated Cement Company Ltd. v. CCE reported in 1989 (41) E.L.T.337; that the case relied upon by the Addl. Collector has no authority for the de novo proceedings and readjudication of the case and was not applicable to the appellant's case; that the show cause notice only demanded duty amounting to Rs. 97,062.82 as wrongly taken credit under Section 11A of Central Excises and Salt Act without proposing any penal action against the appellant under Rule 173Q of the Central Excise Rules, 1944; that the charge of suppression of facts, mis-statement and fraud was brought in for the first time against the appellant in the show cause notice issued by the Addl. Collector; that the power of demanding duty or recovering the amount has been conferred upon the Asstt. Collector as per the Sub-rule (5) of Rule 56A and not on the Addl. Collector; that the appellant has been deprived of one stage of appeal inasmuch as the appeal against the order of Asstt. Collector lies with the Appellate Tribunal; that in the appellant's classification list there was a specific mention that the appellant had opted for modvat facility and the declaration to that effect had been submitted; that this endorsement was scored on the advice of the Central Excise authorities and a new remarks reading as "We are availing proforma credit under Rule 56A" was inserted; that from the date of submission of the request the appellant was maintaining records in forms RG 23A Pt. I and RG 23A Pt.II showing a detailed account of inputs received, duty paid and the credit of duty taken; that the RG 1 register would show that they were maintaining RG 23A Pt. I & II upto 30-6-1988; that this evidence was sufficient to support their contention that a declation had been filed. Summing up his arguments, the ld. Advocate submitted that the impugned order of the Addl.

Collector was without authority and illegal, and therefore may be set aside and demand of duty dropped.

4. Shri B.D. Bhagat, the ld. JDR appearing for the respondent submitted that during the material period, the appellant took set off of duty under Rule 56A without filing a declaration; that filing of a declaration is a mandatory condition before availing set off under Rule 56A of Central Excise Rules, 1944. On the question of assumption of the power of adjudication by the Addl. Collector when the case was remanded to the Asstt. Collector for de novo adjudication, the ld. JDR submitted that a senior officer can always assume the powers of the Junior Officer and therefore under the rules, the Addl. Collector was perfectly within his rights to adjudicate the case; that before adjudication the appellant was given an opportunity and a notice that the cause should be shown to the Addl. Collector and not to the Asstt.

Collector was issued. Reiterating the findings of the lower authorities, the ld. JDR submitted that the impugned order was valid and legal.

5. Heard the submissions of both sides and considered them. I find that the Collector (Appeals) had under Order-in-Appeal No. 414-CE/CHG/89 dated 10-11-1989 ordered : "I have carefully considered the submissions made by the appellant.

I find that the appellants have taken a new plea of time bar as well as that of filing declaration on 1-3-1988 at the stage of appeal, which issues are not discussed in the impugned order nor is there any finding of the Asstt. Collector on such issues. However, since the issue of time bar is a point of law which can be examined only with reference to the actual facts of the case are not discussed in the impugned order, I remand the case back to the Asstt. Collector for his specific finding on the point of time bar as well as on the other points regarding filing of declaration on 1-3-1988 and for passing a speaking order after observing the principles of natural justice. Consequently the impugned order is set aside and the appeal is disposed of by way of remand." The ld. Advocate in support of his contention that the case was remanded to the Asstt. Collector and therefore the Addl. Collector had no authority to examine the issues set out in the order remanding the case relied on the judgement of the Tribunal in the case of Kay International v. CC reported in 1990 (45) E.L.T. 79. In this case, the Tribunal had held : "We have considered the pleas advanced by both sides. We find substantial force in the various pleas of the ld. Advocate for the appellant. The direction for re-adjudication has been made specifically to the Addl. Collector of Customs who had originally adjudicated the case. In the circumstances, we do not see any reason as to why the Collector of Customs took upon himself to re-adjudicate the case in the face of the specific directions of the order of the Tribunal." 6. In the instant case, I find that the direction in the order of remand was to the Asstt. Collector to examine the two issues namely the question of time bar and the question of filing a declaration on 1-3-1988. It was, therefore, the Asstt. Collector who was required to examine the issues. Agreeing with the ratio of the judgement of the Tribunal cited supra, I find that the Addl. Collector had no jurisdiction in the case to take up the case himself for adjudication, issue a fresh show cause notice adding some more points and therefore the impugned order is not sustainable in law. The impugned order is set aside and the appeal is allowed. However, the order of remand by the Collector (Appeals) is still valid and has to be decided by the Asstt.

Collector concerned.