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Issues Involved:
1. Authority to make debit entries under Section 11 of the Act. 2. Legality of adjusting the demand in respect of one factory by making debit entries in the accounts of other factories. Detailed Analysis: 1. Authority to Make Debit Entries Under Section 11 of the Act The primary issue was whether respondent No. 1 had the authority to make debit entries in the accounts maintained by the petitioner in its various factories under Section 11 of the Central Excise and Salt Act, 1944. The petitioner argued that the amended rules required a show cause notice before finalizing any excess duty demand, and respondent No. 1 lacked the jurisdiction to make such debit entries. The court examined Rule 9B, which deals with provisional assessment, and Rules 10 and 10A, which relate to the recovery of duties short-levied or erroneously refunded. The court noted that the amended Rule 10A required a show cause notice for deficiency of duty. However, these rules did not apply to cases covered by Chapter VII A, which deals with the self-assessment of excise duty by the assessee. Under Rule 173F, the assessee is required to determine their liability for duty and pay it before removing excisable goods. Rule 173G outlines the procedure for maintaining an account-current with the Collector and making periodic credits. Rule 173-I states that the proper officer shall assess the duty based on the return filed by the assessee and inform them of any deficiency, which the assessee must then pay. The court found that the rules did not authorize the proper officer to make debit entries in the account-current maintained by the assessee. Instead, the proper officer could inform the assessee of the deficiency and adjust the amount from any sums payable to the assessee. The court concluded that respondent No. 1 had exceeded his authority by making the debit entries himself. 2. Legality of Adjusting the Demand in Respect of One Factory by Making Debit Entries in the Accounts of Other Factories The second issue was whether the demand for excise duty from the Chemical Factory could be realized by making debit entries in the accounts of the petitioner's other factories (Acid, Vanaspati, and Soap factories). The court held that the liability to pay excise duty was on the manufacturer, which in this case was the company, Rohtas Industries Limited. The various units of the company were not separate legal entities but part of the same assessee. Therefore, the company was liable for the excise duty, irrespective of which factory the demand pertained to. The court found no substance in the petitioner's argument that the demand could not be adjusted against the accounts of other factories. The company, as a single legal entity, was responsible for fulfilling the excise duty demand. Conclusion The court allowed the writ application and quashed the debit entries made by respondent No. 1 in the accounts of the petitioner's various factories. The authorities were directed to take action in accordance with the law, considering the final results of the appeals filed by the assessee. There was no order as to costs.
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