TMI Blog1984 (3) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... ar by a manufacturer. Condition (a) was that the exemption would not apply to a manufacturer - (i) during the financial year 1978-79, if the aggregate value of the specified goods cleared, if any, by him or on his behalf, for home consumption, from one or more factories, during the period commencing on the 1st day of April, 1977 and ending on the 28th day of February, 1978, had exceeded ₹ 13.75 lakhs; and (ii) during financial year subsequent to the financial year 1978-79, if such clearances, if any, of the specified goods during the preceding financial year, had exceeded rupees fifteen lakhs. (There were other conditions also but these two conditions, namely, conditions (i) and (ii) of condition (a) are the cause of the dispute and we need, therefore, not reproduce the other conditions). 3. On 30th March, 1979, this notification was amended by another Notification No. 141/79-C.E.; this amending notification besides other things inserted a third condition in condition (a), and read (iii) who manufactures excisable goods falling under more than one item number of the said First Schedule and the aggregate value of all excisable goods cleared by him or on his beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable to a manufacturer who manufactures excisable goods falling under more than one tariff item number and whose aggregate value of different excisable goods cleared by him or on his behalf in the preceding financial year exceeded ₹ 20 lakhs. He states that M/s. Piya Pharmaceuticals continued to avail the exemption although they were not entitled to it by reasons of the changes introduced by Notification No. 141/79 and even after the introduction of a new Notification No. 80/80-C.E., dated 19-6-1980, which superseded Notification No. 71/78-C.E. He said that they did not file any fresh classification list and they suppressed the fact of their total production of excisable goods and clandestinely removed excisable goods without payment of duty knowing that they were liable to pay excise duty since they were not eligible to the exemption. He further said that the factory misdeclared Piyamycetine Vet as eligible to concessions under 116/69 although the goods were not covered by this exemption. The aggregate value of medicine cleared under Item 68 and Item 14E altogether exceeded ₹ 20 lakhs during 1978-79. The Collector goes on to say that by explanation introduced by No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o determine the amount of duty of excise due from the person on whom the notice of demand is served, it is only the same officer, namely the Asstt. Collector, who can decide and determine any duty that is due under the notice. 12. In this case, the Collector had taken it upon himself to determine the duty due from M/s. Piya Pharmaceuticals as a consequence of the notice issued by the Asstt. Collector on 8-5-1981. As the Collector is not empowered to do so, the action of demanding duty and the attempt to recover the so-called short levy is null and void and so is the penalty imposed under rule 173Q and rule 9(2) and the order of the Collector, therefore, requires to be set aside. 13. The learned Counsel said that they had filed a classification list No. PPM/1/211/79 in March, 1979 and this was approved only in April, 1979, after Notification 141/69 had taken effect. The Central Excise knew when they approved this classification list that Notification 141/79-C.E., had already come into operation and they should have taken steps then to inform the factory that they were required to file a fresh classification list. Instead, the Central Excise not only approved this classificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever told why the notice of 8th May, 1981 said that it was not found to be covered under that notification. There seems to have been some chemical test of the drug but they were never informed of the result or about the basis why they said that it was not a life saving drug. 17. The learned counsel for the department in reply said that a classification list was filed in the beginning of March, 1979. The learned Counsel drew our attention to a note in classification list PPM/1/211/79 which reads : notification 181/79, dated 10-5-1979 . He said that this note was not to be found in the original list. By amendment Notification No. 141/79-C.E., dated 30-3-1979 an amendment was inserted in the original Notification No. 71/78. One part of the amendment provided that if the manufacturer manufactured goods under more than one tariff item and the aggregate value of these goods cleared by him for home consumption exceeded 20 lakhs in the preceding financial year, he would be debarred from the exemption. The same amendment also inserted an explanation which clarified that goods which were exempted from the whole of the excise duty by any other notification under rule 8 and are speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be enlisted only when there has been a contravention of rule 9(1). The appellants claim that they filed classification lists and the clearances were with the full knowledge of the Central Excise and there was no clandestine removal. Rule 9(2) incorporates Section 11A which has two time-limits. One, the normal limit of six months and two, the longer limit of five years when the short levy was because by suppression, mis-statement and, generally, by any falsification. In 1979 the factory was guilty of suppression because it did not come forward to inform the Central Excise authorities that by reasons of the new method of calculation of aggregate clearances, it was no longer entitled to the exemption; in 1980 there was mis-statement. He said that rule 9(2) was attracted because there had been evasion. The Tribunal held in Ganesh Metal Corpn. v. Collector of Central Excise, Madras - 1983 E.L.T. 2506 (CEGAT) = 1984 E.C.R. 69 that all the facts relating to the goods had not been made fully known to the Central Excise authorities ; therefore this would render valid the application of rule 9(2). 19. In respect of Piyamycetine Vet, the medicine contained Vitamin B1, Vitamin B2 and N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot seriously claim that when Notification 141/79-C.E. was promulgated, its position and status under the exemption notification remained the same. The amendment brought about very important changes in the manner of calculating the total value of clearances and also wrote in a new condition in respect of past clearances. Henceforth, the aggregate value of clearances would not include values of clearances of specified goods totally exempted under other exemption notifications ; while, in order to arrive at past clearances, a limit of 20 lakhs was imposed as the disqualifying border if the manufacturer cleared goods falling under more than one Central Excise Tariff Item. M/s. Piya Pharmaceuticals manufactured goods which fell under Item 14E and under Item 68. It said that goods under Item 68 were free of duty and therefore were not required to be included in arriving at the value of ₹ 20 lakhs in calculating past clearances. In doing so it claims, that it was supported by the judgments of the Delhi High Court in the Sulekh Ram case and by the Allahabad High Court in Nagrat Paints judgment. But it was correctly pointed out by the learned counsel for the department that there does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct by the proper officer. It is that the demand should be made within the time limit prescribed by 11A-not the process developed in Section 11A that should be followed. As we have observed this was to curb the tendency of the officers frequently to resort to the demands under rule 9(2) without regard to the time when the short levy occurred. The timeless limit of rule 9(2) was a weapon that had been frequently misused; we think that the Govt. did right in cutting down such unlimited power. We think that the learned Counsel for M/s. Piya Pharmaceuticals was mistaken when he argued that only the Asstt. Collector could have issued an order of the kind the Collector did in this case. 23. When the amending Notification 141/79-C.E., was introduced it became clear that further entitlement to the exemption had been placed on a different footing. All those who manufacture goods falling under two or three different Central Excise tariff items would be barred from the exemption if the total value of the clearances of those goods in the previous year exceeded ₹ 20 lakhs. M/s. Piya Pharmaceuticals produced goods which fell under Tariff Item 14E and Tariff Item 68 and the total value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y there was anything they did not know or did not have to arrive at any conclusion that they might need to arrive. We are not able to accept this. To have all details of clearances, production, etc. etc. is not the same thing as having a sheet or a statement or a declaration for a particular purpose designed to meet that one purpose. If the Central Excise were to know that from 1979-80, M/s. Piya Pharmaceuticals would not be entitled to the free first five lakhs, they must be given a declaration for that purpose with relevant totals of clearances of the different goods, whether 14E or 68, so that they can calculate for themselves if the limits are being exceeded or not. And even if we say the Central Excise were at fault when they had all the details, M/s. Piya Pharmaceuticals was at greater fault for failing to do what they surely knew they need to do, or must do in the changed circumstances, to ensure that they were still entitled to the exemption. It is well for all to remember that in taxation there are no permanent benefits to be permanently enjoyed. They can change and the exemption or benefit seeker must keep his title bright if he wants to continue to enjoy the bounty, alwa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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