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TMI Blog1996 (8) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... described under heading No. 44.08 of the Central Excise Tariff liable to excise duty at the rate of 30% ad valorein 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 valorein 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 to Rs. 52,65,758.58 towards special Excise duty on the block boards cleared by the appellant during the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply contending, inter alia, that the show cause-cum-demand notice was barred by limitation under the provisions of sub section (1) of Section 11-A of the Act. But by order dated 27-11-95, the Assistant Commissioner, Central Excise, Debugger, 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 833/92 which had been affirmed by the Supreme Court, but the appellant had not adjusted the duty thereafter and hence Section 11-A(l) 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to Mr. Gogoi, there fore, 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, annexed 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 accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 f&r payment of the difference between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant 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: "To. M/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 pendency 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 classifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 terras of sub-rule(3) of Rule 9-B of Rules in Form B-13 for the amount of Ra. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aka High Court in the case of Davanagere Cotton Mills Ltd. v. Chairman, CBE & C, 1991 (55) E.L.T. 295, wherein following the judgments of the Apex Court in the case of Gokak Patel Volkart Limited v. Collector of Central Excise, Belgaun, 1986 (23) E.L.T. 476 (S.C.) = AIR 1987 SC 1161 and M/s. J.K. Cotton Spg. & Wvg Mills v. Union of India, 1987 (32) E.L.T. 234 (S.C.) = AIR 1988 SC 191, the Karnataka High Court has held that the mandatory provisions of Sections 11-A(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 Company India Limited 1978 (2) E.L.T. (J 416) (S.C.) = AIR 1972 SC 2563 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 11-A 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 Oct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 11-A of the Act and in particular old Rules 10 and 10A of the Rules, we need not take the aid 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 11-A of the Act is extracted herein below: SECTION 11-A. 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, 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 11-A 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 11-A 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 11-A, the meaning of "relevant date" has been given in sub-section (3) (ii) thereof. Sub-section (3)(ii) of Section 11-A 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 ty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 duly 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-I, 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 11-A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable during the period in question for clearance of block boards during the period from March'92 to Jan'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-I 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-III Range 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 exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wenty 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. Versus Union of India and others, Hon'ble Mr. Justice 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 17-3-93 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 gurantee and or covenant with the Central G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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