2005 (10) TMI 92 - SC - Central Excise

Duty demand - Bar of limitation - The Tribunal noticed that the demand notices were dated 31st of May 1990. They were thus prior to the circular dated 23rd October 1990. Therefore it is surprising that the Tribunal still concludes that the demand notices were based on that circular. Even otherwise this circular is merely clarificatory. It does not provide that the classification as per the Circular can only be after the date of the circular. The submissions made by the counsel in Court today ignore amended Section 11A of the Central Excise Act 1944 which categorically provides that if a duty has not been levied or paid or has been short levied or short-paid or erroneously refunded whether or not such non-levy or non-payment short-levy or short-payment or erroneous refund was on the basis of any approval acceptance or assessment the Central Excise Officer can serve a notice as to why payment should not be made. This amendment has been made retrospectively with effect from 17th November 1980. The effect of this amendment was considered by this Court in the case of ITW Signode India Ltd. v. Collector of Central Excise reported in 2003 (11) TMI 114 - SUPREME COURT OF INDIA wherein the validity of this amendment was upheld. The view taken by this Court in Collector of Central Excise v. Cotspun Limited reported in (1999 (9) TMI 87 - SUPREME COURT OF INDIA) was held to be no longer good law. The Order directing Modification of classification list has no bearing on the aspect of demand made under the Show Cause Notices - Demand is not time barred - Decided in favour of Revenue.

Summary

Issues:
1. Clarification on the question of limitation in the Appeals.
2. Tribunal's decision on limitation based on circular dated October 23, 1990.
3. Respondents' argument regarding the modification order and classification list.
4. Analysis of the Tribunal's reasoning and submissions made by the Respondents.
5. Application of amended Section 11A of the Central Excise Act, 1944.
6. Impact of past judgments on the current case.
7. Final decision on the question of limitation and disposal of the Appeals.

Analysis:
1. The Supreme Court initially decided the Appeals in a Judgment reported in 2005 (179) E.L.T. 257. However, subsequent applications were filed seeking clarification on the question of limitation, which had not been addressed in the original Judgment. As a result, the Court restored the Appeals to consider the aspect of limitation while maintaining the Judgment on the question of classification.

2. The Tribunal had ruled in favor of the Respondents on the question of limitation, citing a circular issued by the Board on October 23, 1990. The Tribunal relied on a previous judgment that stated a change of opinion based on a trade notice could only apply prospectively. Consequently, demands made before the circular date were deemed time-barred by the Tribunal.

3. The Respondents argued that modification orders issued under Rule 173B(5) clarified that the new classification would apply "henceforth," implying no demand could be made for periods before the modification order date. This argument was presented to support the contention that the demands were not sustainable.

4. The Court rejected the Tribunal's reasoning and Respondents' submissions, emphasizing that the demands predated the circular date and were not based on it. The Court highlighted the retrospective application of amended Section 11A of the Central Excise Act, 1944, which allowed for notices to be served regardless of the basis of non-payment. Previous judgments were cited to support this interpretation.

5. Considering the retrospective effect of the statutory amendment and the irrelevance of the modification order to the demand notices, the Court concluded that the demands were not time-barred. Therefore, the Court ruled in favor of the appellants on the question of limitation, disposing of the Appeals accordingly.