TMI Blog1978 (11) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... uous and `the rough rolled flat forms of zinc constitute only an intermediate stage in the process. These flat forms of zinc are not removed from the premises in which dry cell batteries are manufactured by the petitioner and are immediately put to use by feeding them while hot into punching process. The flat form rolled out from a zinc ingots by the petitioner as a part of the process of manufacture of dry cell batteries, is a roughs rolled one invariably uniform in length, width and thickness with orached side and uneven and cracked ends and do not have a clear and smooth surface but the surface is scratched, rough and uneven. The flat forms which are produced in the factory of the petitioner by the process of successive rolling on manually operated rolling process are not a marketable commodity and cannot be sold in the open market. 2. The petitioner claims that it started producing these rough rolled flat forms of zinc in its factory from February 15, 1969. Though the authorities of the Central Excise Department of the Union of India were frequently visiting the factory of the petitioner at Allahabad and inspecting the entire process of manufacture of dry cell batteries inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served upon it on May 1, 1976. The petitioner thereupon filed writ petition No. 370 of 1976 in this court assailing the orders. The Union of India, the Appellate Collector, Central Excise, New Delhi and the Assistant Collector of Central Excise, Allahabad are impleaded as the three respondents in this writ petition. The reliefs claimed by the petitioner in this petition, inter alia, are for quashing by a writ or certiorari or any other suitable order, writ or directions the order of the Central Government, issuance of a writ order or directions to the respondents for bidding them from treating the rough rolled flat forms of zinc as "zinc sheets" and levying excise duty thereupon under Item No. 26B(2) of the Schedule to the Act and issuance of a writ of mandamus or any suitable order of directions of that nature so the responders to refund to the petition the amount illegally collected from the petitioner as excise duty on rough rolled flat forms of zinc. 4. It appears that on July 28, 1973, a notice under Rule 10-A under the Central Excise Rules, 1944 was issued by the Superintendent of Central Excise, Allahabad requiring the petitioner to show cause against the recovery from it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission seriatum. ***** 16. There has been a great deal of controversy between the parties as to whether the produce which has been the name of "rough rolled flat form" of zinc by the petitioner, is known to the market as zinc sheets or strips. Having regard in particular to the specifications laid down by the Indian Standards Institution as well as those contained in Brussel's Tariff Nomenclature, it has been strenuously contended by the learned Counsel for the petitioner that the produce of the petitioner's factory cannot be treated to be zinc sheets or strips as known to the market. Inter alia, evidence in the form of affidavits from persons claiming to be familiar with these products as technical experts has also been brought on record on behalf of the petitioner. The respondents have on the contrary, stressed that these cannot be said to establish that the products of the petitioners factory are not known to the market as zinc sheets or strips merely because in some details they differ from the specifications contained in the aforesaid evidence. In the alternative, it has been urged on their behalf that even if the evidence put forward on behalf of the petitioner is accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Flashlight Industries Ltd. Sd/- R.P. Agrawal Secretary and C.A." The letter aforesaid does indicate that to the petitioner. which is admittedly one of the few dry cellbatteries manufacturing units in the country, the flat form from which callots are punched and which is usually manufactured in its own factory process of rolling is admitted to be a product which can be obtained from a rolling mill by getting the same manufactured therein. This letter goes to establish the version of the respondents that the flat forms manufactured by the petitioner as an intermediate product during the process of manufacture of dry cell batteries in its factory, are such which are known as a sheet to the manufacture of dry cell batteries and can be obtained by getting the same manufacture from another factory. In his rejoinder affidavit to the counter affidavit of Shri K. Sethi with which the letter aforesaid has been appended as an annexure, Shri Tapan Malik, Works Manager of the Battery Unit of the petitioner company has not disputed the contents or the authenticity of the letter but has attempted to explain that the term "zinc sheet" used therein was a lease repetition of the description of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cell batteries were manufactured and that they were immediately put to use in making callots by feeding them, while hot, into punching process having not been disputed by the respondents, the demand of excise duty could not be sustained. The respondents have contended this submission by placing reliance upon various rules contained in Chapter VII-A of the Rules which deals with removal of excisable goods on determination of duty by producers, manufacturers or private warehouse licensees, which included what is known as "self-assessment" procedure. Provisions of Chapter VII-A are, as provided in Rule 173A, to have over-riding effect in case there is a conflict between the provisions of this Chapter and those contained in any other Chapter in relation to such excisable goods to which the provisions of Chapter VII-A are made applicable by the Central Government by notification in the official gazette. It is the common case of the parties that by a notification which came into force from August 1, 1959, the provisions of Chapter VII-A of the Rules were made applicable, inter alia, to goods comprised in Item No. 26-B of the First Schedule of the Act. It has been urged on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Counsel for the petitioner is that the demand by the respondents of the amount of duty on the flat forms of zinc manufactured between March 15, 1969 and February 12, 1973 through the notice of demand dated July 30, 1973 is barred by limitation. It has been urged that, inasmuch as under Section 40(2) of the Act, as it stood at the relevant time, no suit, prosecution, or other legal proceedings could be instituted for anything done or ordered to be done under the Act after the expiry of a period of six months from the date of the act or order complained of, the demand relating to any period which was beyond six months prior to July 30, 1973 would be irrecoverable. The argument also is that, in any case, any demand in respect of the flat forms manufactured beyond one year before July 30, 1973 would be irrecoverable due to the provisions contained in Rule 10 read with Rule 173-J of the Rules under which any amount of deficiency is duty where it has been short levied through inadvertence, error, collusion or misconstruction on the part of an officer, could be required to be made good only within a period of one year from the date on which duty was paid or adjusted in the accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in I.B. Satyanarayan v. Superintendent of Central Excise, Warangal Circle and Others (Writ Petition No. 2516 of 1974 decided on April 1, 1976) held that a notice dated September 17, 1971 issued by the Superintendent of Central Excise, Warangal Circle calling upon the petitioner to make good the deficiency in payment of duty on the stocks noticed on January 31, 1970 as having been short levied with duty was invalid as it had been issued after the expiry of a period of six months from the date of inspection in view of Section 40(2) of the Act. The Bench interpreted the judgment of the Supreme Court as laying down that a demand by a departmental authority of an amount of duty would be covered by the bar of limitation contained in Section 40(2) of the Act. Since according to the learned Judges, the alleged levy of duty and issuance of show cause notices were prior to the Amendment of Section 40(2), the notice could not be sustained. The judgment, however, does not contain any detailed discussion on the question as to why the demand made in departmental proceedings could be said to be covered by the expression "other legal proceedings" as used in Section 40(2) of the Act. 25. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that duty or deficiency in duty is payable on a written demand made by the proper officer in cases where either the rules do not make any specific provision for the collection of any duty or of any deficiency in duty if the duty has for any reason been short levied. Before, therefore, Rule 10-A can be resorted to, it has to be found that either the Central Excise Rules do not make any specific provision for the collection of duty in respect where of a demand is being made by the proper officer or also that there is no specific provision therein for the collection of a deficiency in duty which has been short levied for any reason. In no other case can resort be had to this rule. The case of the respondents before us has been that Rule 10-A will be applicable where there has been no assessment of duty at all in accordance with the Act and the Rules. Reliance in this regard is placed on their behalf on the decision of the Supreme Court in the case of Assistant Collector of Central Excise v. National Tobacco Co. of India Ltd. (A.l.R. 1972 S.C. 2563). The petitioner, on the contrary, has placed reliance upon a Bench judgment of this Court in the case of Nagrath Paints (supra) in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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