Sarda Plywood Industries Ltd. and ors. Vs. Union of India (Uoi) and ors. - Court Judgment

Excerpt:
central excise & salt act, 1944; section 11-a--;central excise rules, 1944; rule 9b, 175b--;central excise tariff act, 1985; heading no. 44.10--;classification of--'block boards'--whether 'articles of wood not elsewhere specified' under heading 44.10 sub-heading 44.10.90 or 'similar laminated wood' under sub-heading 44.08.90 of schedule of central excise traiff act--ad-valorem duty 30% or 15%--provisional assessment necessity of--show cause notice requirements of--principles of natural justice essential--limitation period under section 11a of central excise act--computation of--applicability of.;sarda plywood industries ltd. (for short 'the appellant') manufactures and sells plywood products including block board. the appellant filed classification list showing block boards as 'articles of wood not elsewhere specified' as described in the heading 44.10 of the schedule to the central excise tariff act 1985 (for short 'central excise tariff) liable to excise duty at the rate of 15% ad-valorem under sub-heading 44.10.90 but exempted under notification no. 48/87 dated march 1,1987.;the department issued to appellant notice on may 1,1992 to show cause as to why the block boards should not be classified as 'similar laminated wood' under heading no. 44.08 of the central excise tariff rule attracting excise duty at 30% ad-valorem under sub-heading no. 44.09.90 thereof.;the applicant filed writ petitions and went upto the apex court challenging the show cause notice, classification as also took limitation point. several interim orders were passed but ultimately the appellant lost.;the department demanded rs. 2,29,90,563.88 p towards basic excise duty and rs. 52,55,758.58 p towards special excise duty on the 'block boards' cleared by the appellant during the period from march 1, 1992 to january 18, 1993. the appellant challenged the demands but was not successful up to the apex court.;the appellant, however, furnished a bank guarantee on june 9,1995 for rs. 85,00,322/- from state bank of india. the superintendent of customs, central excise, naharkatia range iii issued a show cause-cum-demand notice dated july 6,1995 stating therein that the supreme court classified the 'block boards' under sub-heading 44.08.90 as ' similar laminated wood' and that the appellant was required to pay central excise duty of rs. 2,29,90,563.88 p as basic duty and rs. 52,65,758.58 p as special duty in respect of block boards cleared by the appellant during the period from march 1992 to january 1993.;the appellant was asked to show cause as to why the aforesaid duty should not be demanded from arid paid by the appellant under section 11-a(1) of the central excise & salt act 1944 (for short 'the act').;the appellant showed cause contending there was no provisional assessment and that the present notice was barred by limitation under the provisions of sub-section (1) of section 11-a of the act.;the department contended that there was provisional assessment and by a communication dated february 9, 1993 provisional assessment had been finalised but: the appellant did not adjust the duty and as such sub-section (1) of section 11-a of the act was not applicable. the department then invoked the bank guarantee for rs. 85,00,322/- on november 27,1995 and the state bank of india made payment by a bank draft.;the appellant filed a writ petition for quashing the said communication dated february 9, 1993 and restraining encashment of the bank draft. initially the department was restrained from encashing the bank draft issued by the bank. ultimately the writ petition was dismissed. from this order of dismissal the present appeal was filed.;in the appeal the appellant contended that the department did not follow the mandatory provisions of section 11-a of the act.;in the facts and circumstances of the case and the evidence on record, the division bench held that: - a.k. patnaik, j.1. this is an appeal against the judgment and order dated 28-5-96 of the learned single judge dismissing civil rule no. 5316/95.2. the facts briefly are that m/s sarda plywood industries limited (for short 'the appellant') manufactures and sells a wide variety of plywood products including block boards in its factory at jaipur in assam. the appellant filed classification list w.e.f. 1-3-92 declaring that the block boards manufactured in its factory were 'articles of wood not else were specified' as described in heading 44.10 of the schedule of the central excise tariff act, 1985 (for short 'the central excise tariff) liable to excise duty at the rate of 15% ad-valorem under sub-heading 44.10.90 thereof but exempted under notification no. 48/87 dated 1-3-87. but a. show cause notice dated 1-5-92 was issued by the department to the appellant to show cause as to why block boards should not be classified as 'similar laminated wood' described under heading no. 44.08 of the central excise tariff liable to excise duty at the rate of 30% ad-valorem under sub-heading no. 44.08.90 thereof. the appellant filed civil rule no. 833/92 before this court for appropriate relief and on 20.5.92 this court passed interim orders in the said civil rule allowing levy of excise duty on such block boards at the rate of 15% ad-valorem pending disposal of the writ petition. the appellant again moved this court on 26-6-92 for exemption of excise duty under notification no. 48/87 dated 1-3-87 but the court refused to allow such exemption at the interim stage.3. the appellant then cleared block boards from its factory paying excise duty at the rate of 15% ad-valorem during the pendency of the civil rule, but by judgment and order dated 6-1-93, a learned single judge of this court dismissed the said civil rule no. 833/ 92. pursuant to the said judgment and order, the superintendent customs and central excise, naharkatia range-iii issued demand notice dated 9-2-93 for an amount of rs. 2,29,90,563.88 towards basic excise duty and rs. 52,65,758.58 towards special excise duty on the blook boards cleared by the appellant during the period from 1-3-92 to 18-1-93. the appellant, however, challenged the said judgment and order of the learned single judge before the division bench of this court which was also dismissed by the division bench and against the said judgment of the division bench the appellant filed slp no. 5280/93 before the supreme court with an application for interim stay. the supreme court initially passed interim orders of stay on 4593 but thereafter passed orders on 10-8-93 refusing to stay levy of duty in future and directing that recovery of past arrears up to l7-3-93 would be stayed subject to appellant's furnishing bank guarantee for the amount of arrears within six weeks. pursuant to the said order dated 10-8-93 of the supreme court, the appellant furnished bank guarantees for the arrears of excise duty. finally, on 20-3-95, the supreme court delivered judgment in a batch of cases including that of the appellant reported in : 1995ecr417(sc) upholding the contention of the department that block boards manufactured by the appellant are to be classified as 'similar laminated wood' under heading 44.08 and were liable to excise duty at the rate of 30% ad-valorem under sub-heading 44.08.90 of the central excise tariff. since the bank guarantees furnished pursuant to the order dated 10-8-83 had expired in the meanwhile, fresh guarantee was furnished by the appellant on 9-6-95 for rs. 85,00,322.00 of the state bank of india.4. the superintendent of customs and central excise, naharkatia range iii then issued show-cause-cum-demand notice dated 6-7-95 stating therein that the supreme court in its judgment dated 20-3-95 has classified block boards under sub-heading 44.08.90 and that the appellant was required to pay central excise duty for the 3 periods : november. 1989 to march, 1990, april, 1991 to october, 1991 and march 1992 to january, 1993. the annexures to the said notice indicates that a sum of rs. 2,29,90,563.88 as basic duty and rs. 52,65,758.58 as special duty were to be paid in respect of block boards cleared during the period from march, 1992 to january, 1993. by the said notice, the appellant was asked to show-cause as to why the aforesaid duty should not be demanded and paid by the appellant under section 11-a(1) of the central excise and salt act, 1944 (for short the 'act'). in response to the said show-cause-cum-demand notice, the appellant filed its reply contending, inter alia, that the show-cause-cum-demand notice was barred by limitation under the provisions of sub-section (1) of section 11a of the act. but by order dated 27-11-95, the assistant commissioner, central excise, dibrugarh, held that for the period march, 1992 to january 1993, by the communication dated 9-2-93, the concerned range superintendent had finalised the provisional assessment as per decision dated 6.1.93 of this court in civil rule 832/92 which had been affirmed by the supreme court, but the appellant had not adjusted the duty thereafter and hence section 11-a(1) of the act was not applicable before adjustment of duty of excise after such final assessment. the department then invoked the bank guarantee for rs. 85,00,322.00 on 29-11-95 and a bank draft for rs. 85,00,322.00 was issued by the state bank of india, respondent no. 5. on 6-12-95 against the said bank guarantee by debiting the said amount to the account of the appellant. aggrieved, the appellant filed civil rule no. 5316/95 under article 226 of the constitution with a prayer for quashing the said communication dated 9-2-93 of the superintendent of customs and central excise, naharkatia range iii, demanding excise duty pursuant to decision of this court dated 6-1-93 in civil rule 833/ 92 and for a direction on the respondents no, 1, 2, 3, and 4 not. to encash the bank draft issued by the respondent no. 5. while issuing notice of motion in the said civil rule, the learned single judge passed interim orders on 13-12-95 directing that the department may receive the bank draft, but it will not be encashed until further orders. but ultimately by the impugned judgment and order 28-5-96, the learned single judge dismissed the said civil rule.5. mr. r. gogoi, learned counsel for the appellant, submitted that while dismissing the civil rule, the learned single judge failed to appreciate that the bank guarantee could not be encashed and the excise duty could not be recovered by the department without following the mandatory provisions of section 11a of the act. he submitted that although the department has initially issued show-cause notice dated 6-7-95 under section 11-a(1) of the act for recovery of the duty for the period of march, 1992 to january, 1993, by the order dated 27-11-95, the assistant commissioner, central excise, dibrugarh, had held that section 11-a(1) of the act was not applicable as provisional assessments have been made for the said period and that after finalisation of the provisional assessments, the appellant had not adjusted the differential duty. mr. gogoi vehemently argued that there had been no provisional assessments by the department for the said period of march, 1992 to january, 1993 in accordance with the central excise rules, 1944 (for short the 'rules'). he took us through copies of the r.t 12 returns filed by the appellant for different months during the aforesaid period to show that different types of endorsements had been made by the department from which it could not be concluded that provisional assessments had been made by the department. mr. gogoi also contended that the procedure for provisional assessment contemplated in rules 9b and 173b(2a) of the rules which provided for provisional assessment had not been followed. he also argued that the records would indicate that no bond in the proper form had been executed by the appellant in accordance with the rule 9b(1)(c) of the rules binding itself for payment of the difference of duty between the amount of duty as provisionally assessed and as finally assessed. according to mr. gogoi, therefore, the view taken by the assistant commissioner of central excise, dibrugarh in the order dated 27-11-95 that for the period march, 1992 to january, 1993 that there were provisional assessments was totally erroneous.6. mr. k.n. choudhury, learned senior cgsc, on the other hand, relied on the averments in the affidavit-in-opposition filed on behalf of the respondents 1, 2, 3, and 4 in the civil rule out of which this appeal arises and, in particular, the order dated 23-4-92 of the assistant collector of customs and central excise. dibrugarh, an nexed to the said affidavit-in-opposition and submitted that the block boards were removed by the appellant pursuant to provisional assessments under rule 9b of the rules till a final decision was taken regarding classification of the said block boards cleared by the appellant. he has produced before us the r.t. 12 returns for the period march, 1992 to january, 1993 to show that for each of the said months provisional assessments were made on the back of the said returns under rule 9b of the rules. he also pointed out that a general bond in the prescribed form b-13 had been executed by the appellant and accepted by the department in terms of rule 9b of the rules as far back as on 16-11 -88 as would be evident from the copy of the letter dated 22-11-88 of the superintendent of customs and central excise, naharkatia range iii to the appellant annexed to the said affidavit in-opposition as annexure-c. mr. choudhury. submitted that it is, therefore, not correct that no provisional assessments in terms of the act and the rules were made in respect of block board cleared by the appellant for the period march, 1992 to january, 1993 as contended by the appellant.7. for considering the aforesaid submissions of learned counsel for the parties, we may first, take note of the relevant provisions of the rules relating to provisional assessment in respect of the rate of duty payable on the goods cleared by the assessee from his factory. rule 173-b of the rules provides for filing of list of goods by the assessee for approval of the proper officer. sub rule(1) thereof stipulates that the assessee shall file with the officer for approval of a list showing the full description of goods manufactured by him including the chapter. heading and sub-heading of the central excise tariff under which each goods falls. sub-rule (2) thereof states that the proper officer on such enquiry as he deems fit may approve such classification list with such modification as he considers necessary and unless otherwise directed by the-proper officer, the asessee shall determine the duty payable on the goods intended to be removed in accordance with such list. sub-rule (2a) of rule 173-b further provides that all clearance shall be made only after approval of the classification list by the proper officer. it however provides that if the proper officer is of the opinion that on account on any enquiry to be made in the matter or for any other reasons to be recorded in writing, there is likely to be delay in according the approval, he shall either, on the written request made by the assessee or on his own accord, allow such assessee to follow the procedure prescribed under rule 9-b provisional assessment of goods. rule 9-b of the rules is quoted herein-below in extenso:rule 9b. provisional assessment to duty.--(1) notwithstanding anything contained in these rules--(a) where the proper officer is satisfied that an assessee is unable to produce any document or furnish any information necessary for the assessment of duty on any excisable goods; or(b) where the proper officer deems it necessary to subject the excisable goods to any chemical or any other test for the purpose of assessment of duty thereon; or (c) where an assessee has produced all the necessary documents and furnished full information for the assessment of duty; but the proper officer deems it necessary to make further enquiry (including the inquiry to satisfy himself about the due observance of the conditions imposed in respect of the goods after their removal) for assessing the duty; the proper officer may, either on a written request made by the assessee or on his own accord, direct that the duty leviable on such goods shall, pending the production of such documents or furnishing of such information or completion of such test or inquiry, be assessed provisionally at such rate or such value (which may not necessarily be the rate or price declared by the assessee) as may be indicated by him, if such assessee executes a bond in the proper form with such surety or sufficient security in such amount, or under such conditions as the proper officer deems fit, binding himself for payment of the difference between the amount of duty as provisionally assessed and as finally assessed.(2) * * * *(3) the collector may permit the assessee to enter into a general bond in the proper form with such surety or sufficient security in such amount or under such conditions as the collector approves for assessment of any goods provisionally from time to time;provided that, in the event of death insolvency or insufficiency of the surety or where the amount of the bond is inadequate, the collector may, in his discretion, demand a fresh bond and may, if the security furnished for a bond is not adequate, demand additional security.(4) the goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are not so assessed.(5) when the duty leviable on the goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of, or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be.a reading of sub-rule (1) of rule 9b quoted above would show that the proper officer may, either on the written request made by the assessee or, in his own accord, direct that the duty leviable on such goods shall pending enquiry be assessed provisionally at such rate (which may not necessarily be the rate declared by the assessee) as may be indicated by him, if such assessee executes a bond in proper form with such surety of sufficient security in such amount, or under such conditions, as the proper officer may deem fit, binding himself for payment of the difference between the amount of duty as provisionally assessed and as finally assessed. sub-rule (3) of rule 9b, however, provides that the collector may permit the assessee to enter into a general bond in the proper form with such surety or sufficient security in such amount or under such conditions as the collector approves for assessment on goods provisionally assessed from time to time.8. the question, therefore, is as to whether provisional assessments have been made in accordance with the aforesaid procedure laid down in sub-rule (2a) of rule 173b and rule 9b of the rules with regard to the rate of duty that is payable on block boards cleared by the appellant from its factory during the period from march/92 to january/93 on the basis of the classification list w.e.f. 1-3-92 filed by the appellant. in serials 13 to 17 of items of the said classification list, the appellant had claimed that the block boards manufactured by it fell under sub-heading no. 4410.90 but were exempted from excise duty under the notification no. 48/87 dated 1-3-87. on the said classification list w.e.f. 1-3-92 the assistant collector, customs and central excise, dibrugarh (for short 'the assistant collector') passed on 23-4-92 the order in annexure-b to the affidavit-in-opposition filed on behalf of the respondents no. 1, 2, 3 and 4 in the civil rule, which is extracted hereinbelow:tom/s. sarda plywood industries ltd. joypore,p.c. joypore-786614.sub: classification list on plywood products w.e.f. 1-3-92. please refer to your letter ref. no. ex/289/7192 dt. 7-3-92 submitting the above classification list.2. the above classification list could not be finally approved due to tendency of certain verifications at this end. however, the goods mentioned under items 6 of the classification list may be taken clearance by you as per declared classification and rate of duty payable, execpt goods against sl. 13.to 17 of items 6 goods i.e. block boards of different brands as mentioned against said sl. 13 to 17 of items 6 of the classification list should be taken clearance under sub-heading no. 4408.90, on payment of duty @30% ad-veloren (basic) plus special as applicable in view of amendment to the chapter note 5 of the chapter 44 of the central excise tariff act, 1985, by the finance bill, 1992.you are, therefore, asked to take clearance of the goods under the above classification list as mentioned above. all past and future clearances under this classification list will be assessed provisionally under rule 9-b of the central excise rules, 1944 till final approval of the classification list.sd/- d.b. baralassistant collector,customs & central excise, dibrugarhit would be clear from the aforesaid order dated 23-4-92 of the assistant collector that he directed that all clearance of block boards under the classification list w.e. f. 1.3.92 would be assessed provisionally under rule 9b of the rules till final approval of the classification list after verification and that the clearance of block boards of different brands mentioned against serial nos. 13 and 17 of item 6 of the classification list would be on payment of duty at the rate of 30% ad valorem basic + special as applicable. thus the assistant collector by the said order dated 23.4.92 had directed in terms of the aforesaid sub-rule (2a) of rule 173b as well as sub-rule (1) of rule 9b of the rules that the duty leviable on block boards pending enquiry shall be assessed provisionally at the rate of 30% ad valorem basic + special duty and not at nil effective rate as claimed by the appellant under the exemption notification no. 48/87. as the duty at the rate 30% ad valorem was being directed to be paid by the appellant for clearance of block boards on provisional assessment, the proper officer obviously did not deem it fit to require the appellant to execute a bond in the proper form binding itself for payment of difference between the amount of duty as provisionally assessed and as finally assessed. thereafter, a show-cause notice dated 1.5.92 was issued by the department to the appellant to show cause as to why its products block boards should not be classified under sub-heading 4408.90 of the central excise tariff. it is at this stage that the appellant moved this court in civil rule no. 833/92 and obtained the interim order dated 20.5.92 to the effect that excise duty would be levied on the block boards cleared by the appellant at the rate of 15% ad valorem pending disposal of the writ petition. the said order dated 20.5.92 passed in civil rule no. 833/92 did not provide for furnishing any security by the appellant for the difference of duty between the rate of 15% ad valorem allowed by the court and 30% ad valorem + special duty as claimed by the department and hence the department could not possibly insist on the appellant to execute any bond or to furnish any security binding itself to pay the difference of duty at the rate of 15% ad valorem as allowed by the court and at the rate of 30% ad valorem + special duty as claimed by the department and the department instead banked upon the general bond executed by the appellant in terms of sub-rule (3) of rule 9b of the rules in form b-13 for the amount of rs. 4 lakhs on 16.11.88 and accepted by the department on 22.11.88 as per letter dated 22.11.88 of the superintendent of customs and central excise, naharkatia-iii range to the appellant, a copy of which has been annexed as anneure-c to the affidavit-in-opposition filed on behalf of the respondent nos. 1, 2, 3 and 4 in civil rule no. 5316/95. thus, there was in fact an order dated 23.4.92 of the assistant collector for provisional assessment and clearance of block boards at the rate of 30% ad valorem + special duty and the effect of the interim order dated 20.5.92 of this court in civil rule no. 833/92 was not that the said order for provisional assessment was altogether nullified, but that during the pendency of the civil rule the block boards were to be cleared by the appellant from its factory on payment of excise duty not at the rate of 30% ad valorem as directed by the assistant collector but at the rate of 15% ad valorem as directed by the high court. in fact, it appears that the block boards were cleared on payment of excise duty at the rate of 15% ad valorem during the pendency of the civil rule and on the back of the monthly r.t. 12 returns for the period march '92 to january '93 filed by the appellant statements under the signature of the central excise officer-in-charge have been made that duty on the goods have been assessed provisionally under rule 9b and that the provisions of the said rule shall apply for recovery of deficiency or refund of excess duty. it is thus clear from the aforesaid facts on record that the procedure prescribed under sub-rule (2-a) of rule 173b and rule 9b of the rules for provisional assessment has been followed and that the contention of mr. gogoi that there were no provisional assessments in accordance with the rules for the period march, 1992 to january. 1993 has no force.9. mr. gogoi next contended that assuming there were provisional assessments in accordance with the rules in respect of block boards cleared by the appellant during the period march'92 to january '93, the department would still have to follow the mandatory provisions of section 11-a(1) of the act and issue show cause notice within six months from the relevant date for recovery of duty from the appellant on such block boards that has been short paid during the said period and the view taken by the assistant commissioner of central excise, dibrugarh (for short 'the assistant commissioner') in his order dated 27.11.95 that section 11a was not applicable to the facts of the present case was erroneous in law. mr. gogoi cited the judgment of the karnataka high court in the case of davanagere cotton mills ltd. v. chairman, cbe & c, : 1993ecr80(karnataka) , wherein following the judgments of the apex court in the case of gokak patel volkart ltd. v. collector of central excise, belgaun : 1987(28)elt53(sc) and j.k. cotton spg & wvg mills v. union of india : 1987(32)elt234(sc) , the karnataka high court has held that the mandatory provisions of section 11a(1) and (2) of the act have to be followed for recovery of any excess duty levied or short levied or not paid or short paid. mr. gogoi also relied on the judgment of the apex court in the case of assistant collector, central excise, calcutta v. national tobacco co. india ltd., : 1978(2)elt416(sc) as well as rules 10 and 10a of the rules which existed prior to august, 1977 as well as rule 10 of the rules which came into force in august, 1977 and remained in the statute book till the present section 11a of the act was introduced. he also pointed out that the very same assistant commissioner in another order dated 15.3.96 for the periods november, 1987 to march 1990 and april, 1989 to october 1991 in respect the appellant, has held that section 11a of the act is applicable for recovery of the differential duty pursuant to final assessment even where there are provisional assessments. he argued that since there has been short payment of duty by the appellant during the period march'92 to january'93, the department could not recover the duty which has been short paid by encashing the bank guarantee without complying with the provisions of section 11a of the act. mr. k.m. choudhury, the learned cgsc, on the other hand, submitted that the view taken by the assistant commissioner that section 11-a(1) of the act was not applicable until differential duty was adjusted pursuant to finalisation of a provisional assessment was correct in law.10. the cases of gokak patel volkart limited and m/s j.k. cotton spg and wvg limited as well as the case of davanagere cotton mills limited (supra) cited by mr. gogoi are not cases where any provisional assessments were made and the question as to whether the provisions of section 11a(1) and (2) have to be followed by the department for recovery of the difference of duty as provisionally assessed and as finally assessed was not considered by the court and thus the said three decisions are not authorities on the point that where provisional assessments have been made in accordance with the rules, even for recovery of the difference of duty as provisionally assessed and as finally assessed the provisions of section 11a(1) and (2) have to be complied with by the department. the case of national tobacco company india limited (supra) cited by mr. gogoi was not on section 11a of the act but on rule 10 and rule 10a of the rules as they existed then. the supreme court, however, explained in paragraph-21 of the judgment as reported in the air that when payment of tax has been made without any process of assessment determining whether levy was short or complete, such payment was only provisional and not final. in paragraph-22 of the said judgment, the supreme court further explained that an assessment is a quasi-judicial process which involves due application of mind to the facts as well as requirement of law and mere mechanical adjustment of duty would not amount to such assessment but a provisional collection which would become levy in the eye of law only after assessment was made. the aforesaid decision rather than supporting the contention of the appellant supports the contention of the department that duty paid without any final decision on the classification of the goods cleared by the assessee is only provisional in nature and until proper adjudication is made on the classification of goods and a final assessment is made pursuant to such adjudication and the differential duty is adjusted as per such final assessment, there was no short levy or short payment of duty. regarding the reference made by mr. gogoi to the legislative history of section 11a of the act. and in particular old rules 10 and 10a of the rules, we need not take the aid of the said legislative history to decide the question as to whether for recovery of differential duty pursuant to a final assessment in the case of provisional assessment. sub-sections 1 and 2 of section-11a have to be followed, because the legislative intent on this question would be clear from the very language used in section 11a of the act.11. section 11a of the act is extracted herein below:section 11a. recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded.-- (1) when any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a central excise officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this act or of the rules made there under with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect (as if * * *), for the words 'six months', the words 'five years' were substituted.explanation--where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be.(2) the central excise officer shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.(3) for the purposes of the section,--(i) 'refund' includes rebate of duty of excise on excisable goods exported out of india or on excisable materials used in the manufacture of goods which are exported out of india;(ii) 'relevant date' means,--(a) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid--(a) where under the rules made under this act a monthly return, showing particulars of the duty paid on the excisable goods removed during the month to which the said return relates, is to be filed by a manufacturer or producer or a licensee of a warehouse, as the case may be, the date on which such return is so filed;(b) where no monthly return as aforesaid is filed, the last date on which such return is to be filed under the said rules;(c) in any other case, the date on which the duty is to be paid under this act or the rules made there under,(b) in a case where duty of excise is provisionally assessed under this act or the rules, made there under, the date of adjustment of duty after the final assessment thereof;(c) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund.it will be clear from sub-section (1) of section 11a of the act that the said sub-section (1) applies to two broad types of cases: (1) where duty has not been levied or paid or has been short levied or short paid, and (2) where duty of excise has been erroneously refunded. in these two types of cases, sub-section (1) of section 11a requires issue of a notice within six months from the 'relevant date' on the person chargeable to duty requiring him to show cause as to why he should not pay the amount specified in the notice. for the purpose of section 11a, the meaning of 'relevant date' has been given in sub-section (3)(ii) thereof. sub-section (3)(ii) of section 11a would show that for the first type of cases wherein duty has not been levied or paid and where duty has been short levied or short paid the meaning of 'relevant date' has been given in sub-section (3)(ii)(a) and in the second type of cases wherein duty of excise has been erroneously refunded the 'relevant date' has been given in sub-section (3)(ii)(c). cases of provisional assessment have been put under sub-section (3)(ii)(b) in which it is stated that in case duty of excise is provisionally assessed under the act. or the rules, the date of adjustment of duty after the final assessment thereof would be the 'relevant date'. sub-section (3)(ii)(b), therefore, makes it abundantly clear that in case of provisional assessment until a final assessment is made and the differential duty is adjusted, the central excise officer need not issue any notice under sub-section (1) of section 11a for recovery of the said difference of duty as provisionally assessed and as finally assessed. this is because any duty of excise paid pursuant to provisional assessment is only provisional and sub-rule (5) of rule 9b quoted above imposes an obligation on the assessee to pay the deficiency of duty, in case, the duty provisionally assessed falls short of the duty finally assessed. we are therefore of the considered opinion that it is only duty that has not been levied in a final assessment and adjusted pursuant to such final assessment and yet found to be due from the assessee which is treated as duty that is short levied or short paid for the purposes of section 11a of the act in cases of provisional assessments.12. mr. gogoi submitted that if this view that sub-sections (1) and (2) of section 11a providing for show cause notice and determination of amount of duty respectively need not be followed in case of provisional assessments is accepted then the assessee would in every case of provisional assessment be deprived of a show cause notice and a determination of amount of the differential duty of excise due from him. we cannot accept this submission of mr. gogoi because section 11a besides providing for a show cause and a determination of amount of excise duty also provides the limitation for recovery of duty and therefore has to be strictly construed by the court. sub-section (3)(ii)(b) of section 11a stipulates that the limitation of six months or five years as provided in sub-section (1) of section 11a for issue of a show cause notice will begin to run from the date of adjustment of duty after final assessment where duty has been provisionally assessed meaning thereby that there would be no limitation for recovery of such difference in duty as provisionally assessed and as finally assessed. moreover, it will be clear from the language of sub-rule (1) of rule 9b quoted above that provisional assessment is made in respect of either the rate of duty or the value of the goods pending final determination of such rate of duty or value of goods. in any proceedings for approval of classification of goods for the purpose of determining the rate of duty or in any proceedings for approval of the price of goods for the purpose of determining the value of goods, a show cause notice and if desired a personal hearing have to be given by the department to the assessee consistent with the principles of natural justice before an adjudication order determining the rate of duty or the value of goods is passed. similarly, at the time of making the final assessment under rule 173-1, the proper officer will have to follow the principles of natural justice and quantify the amount of duty due from the assessee. independent of the provisions of section 11a of the act, therefore, the department would have to comply with the principles of natural justice and determine the amount of excise duty payable by the assessee, and where an assessee makes a grievance that the principles of natural justice have not been followed or that the amount of duty that is sought to be recovered from the assessee has not been quantified, it will be for the court to examine the grievance in the facts of the case.13. so far as the present case is concerned, we find that a show cause notice dated 1.5.92 was issued to the appellant to show cause as to why its products block boards described in the classification list w.e.f. 1.3.92 shall not be classified under sub-heading no. 4408.90 of the central excise tariff and the appellant in fact filed reply to the show cause notice on 22.6.92 and a personal hearing was also granted to the appellant and only thereafter an adjudication order on the classification of goods or rate of duty was passed on 28.10.92 by the assistant collector, holding that block boards are to be classified under sub-heading no. 4408.90 of the. central excise tariff. on the classification of the said block boards, the appellants were also heard by this court in civil rule no. 833/92 and thereafter in writ appeal and finally by the supreme court, and the contention of the department that the block boards are to be classified under sub-heading no. 4408.90 of the central excise tariff was upheld by the supreme court. with regard to value of such block boards, the appellant declared the price of the said goods in its price lists submitted from time to time during the aforesaid period from march '92 to january '93 and the value of the block boards as declared by the appellant in the said price lists was approved by the department. hence no show cause notice was required to be given to the appellant by the department and no adjudication was called for with regard to value of such block boards cleared by the appellant. after the decision of the supreme court on the classification of block boards and approval of the value of block boards, the department appears to have quantified the differential amount of duty that was payable by the appellant for the period from march '92 to january '93 in the final assessment memorandum dated 29.5.96. in the said final assessment memorandum dated 29.5.96, it is stated that pursuant to an order dated 15.3.96 of the commissioner (appeals), central excise, calcutta, the appellant was requested to submit detailed calculation of value and duty payable during the period in question for clearance of block boards during the period from march'92 to january'93 but the appellant failed to submit any such calculation within such stipulated time. in the said order the duty that has been finally assessed during the period from 1.3.92 to 18.1.93 under rule 173-1 of the rules is rs. 2.29,90,653.88 (basic) and rs. 52,65,675.58 (special) totalling to rs. 2,82,56,322.46 which is the same as in the notice dated 9.2.93 of the superintendent of central excise, naharkatia-range iii to the appellant impugned in the civil rule. it is thus clear from the aforesaid narration of the facts of the case on record that this is not a case where principles of natural justice have not followed or where there was no determination of the amount of duty sought to be recovered by the department by encashing the bank guarantee.14. it was finally urged by mr. gogoi, learned counsel for the appellant, that this is not a case where the bank guarantee had been obtained by the department in course of commercial transactions and hence the law that the court will not restrain a party from invoking a bank guarantee furnished in course of a commercial transaction except on the ground of fraud or special equity will not be applicable to the facts of the present case. mr. gogoi cited the judgment of the delhi high court in the case of bottle gas pvt. ltd. v. union of india air 1985(del 400 in which it has been held that the court can examine the action of the government when it seeks to invoke a bank guarantee demanded in exercise of statutory or executive power and quash the decision of the government to invoke a bank guarantee if it was arbitrary or mala fide. mr. gogoi explained that though initially bank guarantees had been furnished by the appellant pursuant to the interim order dated 10.8.93 of the supreme court in slp (c) no. 5280/93 as a condition of stay for recovery of the arrears upto 17.3.93, the said bank guarantees lapsed, and it was only after the supreme court delivered the judgment on 20.3.93 rejecting the case of the appellant that the bank guarantee for rs. 85.000,322 which is a subject matter of the present appeal was obtained by the department from the appellant on 9.6.95. mr. gogoi submitted that such action of the department demanding the bank guarantee from the appellant after the disposal of the case before the supreme court on 20.3.95 was patently mala fide and this court should not allow the department to encash the bank guarantee.15. mr. k.n. choudhury, in reply, submitted that the court in exercise of its powers under article 226 of the constitution should not interfere with the encashment of bank guarantee on the technical plea that the bank guarantee was obtained after the disposal of the case in the supreme court on 20.3.95 if the court comes to the conclusion that the amount covered under the bank guarantee was due to the department and that the department had the powers to recover duty by encashment of the bank guarantee. he cited the decision of the apex court in j.k. steel ltd. v. union of india, : 1978(2)elt355(sc) in support his aforesaid submission.16. the stipulations in the said bank guarantee executed on 9.6.95 which are relevant for the purpose of deciding the aforesaid question raised by the counsels for the parties are extracted hereinbelow:we state bank of india having a branch known as commercial branch, 24, park street, calcutta-700016 do hereby guarantee the payment of rs. 85,00,322/- (rupees eighty five lacs three hundred twenty two only) to the president of india acting through the collector of central excise, shillong (hereinafter referred to as 'the central government') in the circumstances subject to condition noted below:--whereas, in special leave petition (c) no. 5280 of 1993 sarda plywood industries ltd. etc. etc. v. union of india and ors., hon'ble mr. justice j.s. verma, hon'ble mr. justice a.s. anand and hon'ble mr. justice s. p. bharucha were pleased to pass an order on 10.8.93 to the effect that recovery of past arrears upto 17.03.93 from m/s sarda plywood industries ltd. (hereinafter referred to as the petitioner') is stayed on the condition that the petitioners furnish bank guarantee for the amount of arrears within six weeks.and whereas the said petitioners have requested to furnish the required bank guarantee to the satisfaction of the collector of central excise, shillong to the president of india, hereinafter called the central government for a sum of rs. 85,00,322/- (rupees eighty five lacs three hundred twenty two only) and accordingly we, do as primary obliger and not merely as surety, hereby irrevocably, unconditionally and absolutely guarantee and or covenant with the central government represented by collector of central excise, shillong and/or his successor or successors in office that on vacation of interim stay or in the event of the decision adverse to the petitioners being given by the said court or dismissal of special leave petition whichever, is earlier, we would make the said payment to the central government on demand without demur notwithstanding that the petitioners are not called upon in the first instance to pay to the government the said amount before calling upon us to pay the said amount under this guarantee.it is apparent from the aforesaid recitals in the bank guarantee that is on the request of the appellant that the state bank of india, respondent no. 5, furnished the bank guarantee for rs. 85,00,322/-as security for the arrears of duty upto 17.3.93. we have already held that the department has after following the principles of natural justice determined that an amount of rs. 2,82,56,322.46 was payable by the appellant to the department towards basic and special excise duty for the period of 1.3.92 to 18.1.93 under rule 9b(5) of the rules and that there was no bar under section 11a of the act for recovery the said differential duty finally assessed under rule 173-1 of the rules. the appellant has not shown before us that any amount less than rs. 85,00,322 was due to the department or that no amount was due to the department as arrears of duty upto 17.3.93. on these facts, the contention of mr. gogoi that the bank guarantee was obtained in a mala fide manner and was sought to encashed by the department in an arbitrary manner has no merit.17. before parting, we would like to mention that we would have normally not expressed any opinion on the question as to whether there were provisional assessments in this case and as to whether there was any bar under section 11a of the act to recover the duty sought to be realised by the department by encashing the bank guarantee, as we have done in the connected cases, considering the fact that the appellant is also pursuing his remedies of appeal against the demand of duty under the act and the rules, but mr. r. gogoi, learned counsel for the appellant made a categorical statement that he had clear instructions from the appellant to press for decision from this court on the said contentions raised before us and it is for this reason that we have pronounced our judgment on the said contentions.18. all the contentions raised by the appellant having failed, the present appeal is dismissed and the interim orders dated 3.6.96 and 5.6.96 passed in this appeal restraining the department from encashing the bank draft are vacated. the learned single judge in the impugned judgment dated 28.5.96 while dismissing the civil rule of the appellant has awarded a cost of rs. 3000 in favour of the department. we do not propose to award any further cost in this appeal. the cost awarded by the learned single judge is affirmed.