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TMI Blog2006 (7) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... peals, final order No. 83/2000-A dt. 18-2-2000 Misc. Order No. 147/2000-A, dt. 22-12-2000 are challenged. By order dt. 18-2-2000, the Tribunal held that the clearances of the goods were effected pursuant to the approved classification list and price list and that being the position, the entire exercise undertaken by the department in pursuance of the show-cause notice dt. 31-3-86 was illegal. The Tribunal, therefore, set aside the order passed by the adjudicating authority and the department was directed to refund the amount expeditiously. That order was challenged by filing applications to rectify the mistakes on the ground of subsequent amendment of the statute. The Tribunal dismissed those applications relying upon the Cotspun's case and held that the subsequent amendment of statute cannot be a reason for entertaining a petition for rectification of a mistake. In view of the interpretation rendered by us with regard to statutory provisions, these appeals are required to be allowed and the matters are required to be remitted to the Tribunal for deciding it on merits with regard to the other contentions which are sought to be raised on facts. In the result, appeals are allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice dated 29-10-1987. This show cause notice relates to the period from 25-8-1985 to 28-2-1986 raising a demand of differential duty of ₹ 50,64,274/-. It may be of relevance here to note that the second show cause notice dated 29-10-1987 includes the period prior to the date of issue of the first show cause notice i.e. 31-3-1986. 6. For the sake of convenience, let's deal with the case of the second show cause notice first and thereafter that of the first notice. Appeal No. E/1890 of 1990 7. At the outset, the learned counsel for the appellant submits that the second show cause notice dated 29-10-1987 was issued by the Department in respect of very similar allegations as contained in the first show cause notice dated 31-3-1986. It was argued that except for the period and the amount demanded, both the show cause notices took into account the same set of allegations i.e. mis-declaration of value. In this connection, the learned Counsel for the appellant heavily relied upon the ratio of the decision of the Hon'ble Supreme Court in Nizam Sugar Factory v. Commissioner of Central Excise, A.P, 2006 (197) E.L.T. 465 (S.C.). The said judgment also referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or of Central Excise, Baroda v. Cotspun Ltd.", supra. 11. While passing the judgment in Civil Appeal No. E/2693/2000 on 13-1-2003, the Hon'ble Supreme Court in the case of Easland Combines v. CCE, Coimbatore (supra) took into account the amendments made in Section 11A of the Central Excise Act, 1944 which came into force w.e.f. 17-11-1990 by the Finance Act, 2000 (10 of 2000). This amendment was found by the Hon'ble Court to have replaced the ratio of the judgments rendered in the case of Collector of Central Excise, Baroda v. Cotspun Ltd., supra and Easland Combines v. CCE, Coimbatore, supra. In para 21, the Hon'ble Supreme Court held as follows : "21. ……. In view of the amendment of Section 11A(1), the decision rendered by this Court in Cotspun's case (supra) would not be a good law. Show cause notice for correcting errors or mistakes in approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under the provisions of the Act or the Rules made thereunder could be issued within the prescribed period." 12. At the outset, the learned counsel for the appellant argued that the show cause notice issued by the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng sheets. 19. It was also contended that for working out the demand, the Department did not rely upon the invoices and hence the demand cannot be sustained. 20. The various items, namely :- (1) Compressors (2) Shell and Tube Condensors (3) Shell and Tube Chillers (4) Refrigeration Units/Skid mounted units (for B.H.P.& V and I.O.L) (5) Package Type Air-Conditioner (6) Frick Ice Reserve Unit (FIRU) (7) Frick Air Cooling Units (FAU) (8) Frick Air Cooling Units (Freon) (FAUF) (9) Frick Air Handling Units (FAH) (10) Evaporative Type Condensor (FAE) (11) Delta Stream Condensing Towers (CTU) (12) Instant type Water Coolers (FIWC) (13) Trunk Type Ice Tank Coils (14) Humiguard Ammonia Air Cooling Unit (15) Evaporative Type Condensor (HUC-30) (16) Atmospheric Type Condensor were taken up individually during the arguments to state that while calculating the differential duty, the Department had relied upon unauthenticated document and also without invoice. When the goods were sent to their suppliers, they were not in ready assembled form as may be seen in the purchase order issued by the Indian Oxygen Ltd., Calcutta. 21. The learned counsel for the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that there were parallel provisions in both Customs and Excise Acts, which were pari materia. A comparison was made between Section 130 of the Customs Act with Section 35E of the Central Excise Act and also Section 28 of the Customs Act with Section 11A of the Central Excise Act to demonstrate it. According to him, the approval of such price list was immaterial to proceed under amended Section 11A and no review under Section 35E needs to precede the demand under Section 11A. He also made an effort to distinguish the judgment of this Tribunal in the case of Madhus Garage Equipments v. CC (Appeals), Bangalore, supra, by stating that the said judgment did not deal with a situation wherein the price list was to be reviewed and that there was no consideration in respect of Section 11A of the Act, as this judgment related entirely to the provisions of Customs Act. 24. As regards the plea taken up by the appellant that no penalty was imposable on them on the basis of the construction of explanation under Section 110 of the Finance Act, 2000. The Departmental Representative relied upon the Hon'ble Supreme Court's decision in the case of Thomas Dana v. State of Punjab, 1999 (110) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll under Item 29A(i) or under Item 29A(ii). As the question of classification was not at all disputed in the show cause notice, it was strange that the Collector had taken a decision of classifying them which, according to the appellant, amounted to go beyond the scope of the show cause notice. 26. It was argued by the learned SDR that a bare perusal of the nomenclature of those items and that the available literature thereon, would clearly indicate that none of these items could be treated as exempted parts. Further, the price list and other details as referred to in the show cause notice conform the marketability of these items. Hence the Department had correctly demanded differential duty as the value of the excisable and non-excisable components of such items was not included at the time of clearance. Reasons : 27. We have had the benefit of hearing the rival sides at great length. Having given anxious considerations for various arguments made before us, we note that very few of the arguments sprouted during the hearing could blossom into workable propositions. Of such blossoms, hardly a few could fructify into reasons. 28. It was contended on behalf of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who has, by necessary implication, taken on the liability to pay all taxes on the goods sold and has not sought to realise any sum in addition to the price obtained by it from the purchaser. The purchaser was under no obligation to pay any amount in excess of what had already been paid as the price of the scrap". We do not tend to agree with the arguments of the appellant demanding cum-duty benefit on the value arrived at by the Department as we find specific evidence in the purchase order dated 22-3-1984 of Indian Oxygen Ltd., Calcutta, which contains the following clause as footnote : "Excise duty, octroi or any other similar State or Central Govt. imposts, as applicable at the time of dispatch shall be payable extra at actuals." It is clear from the above that the obligation for payment of excise duty rests squarely on the purchaser. It has been contended by the Department that while arriving at the price for calculating the differential duty, the excise component stands expunged. As it is a factual position that the wholesale price on the basis of which the differential duty was calculated is devoid of excise elements, the ratio of the decision of Maruti Udyog Ltd., supra, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the value was never challenged by the appellant, though excisability was challenged. Hence it cannot be stated that the show cause notice of 1974, in any way, came in the way of raising demand under Section 11A in the year 1986. 34. The observations made by the Hon'ble Supreme Court of India in Civil Appeal No. 2693/2000 (M/s. Easland Combines, Coimbatore v. CCE, supra), whether there was any ground for invoking the first proviso to sub-section (1) of Section 11A of the Central Excise Act, 1944 and the inferences drawn on the relevant amended portion of Section 11A, inter alia, reflect in the Paragraphs 11 to 14 reproduced below : "11. ……..As stated earlier, the relevant amended portion of Section 11A inter alia makes it abundantly clear that when any duty of excise has been short levied or short paid, whether or not such short levy or short payment was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of the Act or the rules, the Central Excise Officer, can within one year from the relevant date, serve notice on the person chargeable with the duty, which has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was based are fundamentally altered and the decision in Cotspun's case would not have been rendered if amended Section 11A was in existence. This is done by re-enacting retrospectively a valid and legal provision. It is settled principle that legislature can change the basis on which a decision is given by the Court and thus change the law in general. It is also well settled law that the legislature can always render a judicial decision ineffective by enacting a valid law on the topic within its legislative field by fundamentally altering or changing its character retrospectively (Re : Indian Aluminium Co. v. State of Kerala (1996) 7 SCC 637. 14. Further, learned Attorney General rightly referred to the Statement of Objects and Reasons in support of the contention that the law is altered so as to change the entire basis of the judgment rendered in Cotspun's case (supra). From the Statement of Objects and Reasons, it is abundantly clear that the main purpose of the amendment was to fill in the lacuna pointed out by this Court by interpreting Rule 10 as it existed. As quoted above, the objects and reasons clearly provide that it was to validate certain actions taken under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be compared with the legislative aims, contents and coverage, the fiscal impact and procedural labyrinths peculiar to Central Excise. Relying upon the Hon'ble Supreme Court's decision in Easland Combines, Coimbatore (supra), it is now unambiguous for us that no review under Section 35E is called for in such circumstances. While arriving at this conclusion, we note that the provisions, namely, Section 35E and Section 11A of the Act operate at different wave-lengths and altogether for different purposes. 37. The impugned order is right in saying that the appellant had filed the price list in a wrong proforma which has mis-led the Department causing considerable loss to the Exchequer. Although, it was vehemently argued that the show cause notice never envisaged the use of a wrong proforma, we do not find much substance in such an argument as we find that the show cause notice had clearly referred to the aspect of "undervaluation and misdeclaration of values in prices" furnished by them. We too note that the proforma adopted by the appellant does not reflect the real sale practice in a clear manner. Because of such wrong declaration which has now proved to be the "false declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulous and detailed observations, to be followed by solid inferences in respect of each of the items under dispute. (Paras 10 to 25 of the impugned order refers) These facts in our opinion cannot simply be brushed aside considering the evidentiary strength available here. We are reminded of the remarks made by John Dewey, when he said, "We can have facts without thinking, but we cannot have thinking without facts." The learned Collector has treaded along the right line of thinking taking into account the reliable sets of facts. 41. Compressing out focus on the compressor, a "major item", we find that the learned Collector has gone by the appellant's own costing sheet to discover that the cost of compressor worked out to about three times the value as originally declared by the appellant to the Department. On the other hand, the cost of the non-dutiable "accessories" was found to be only 1/8th of the so called price of the accessories as charged by the appellant from their clients. The costing sheets recovered in respect of all such "accessories" have proved rather costly to the appellant, as they have opened up the Pandora's Box, revealing the fact that the appellant had loade ..... X X X X Extracts X X X X X X X X Extracts X X X X
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