TMI Blog2007 (8) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the manufacture of cotton and manmade yarn as well as manufacture of fabrics covered under various tariff items of the Central Excise Tariff. Yarn manufactured by the appellants were either sold to the customers or were captively consumed in the manufacture of fabrics. 3.It is not in dispute that the classification list as well as the price list filed by the appellant in respect of the yarn manufactured by them were approved by the excise authorities and the appellant used to clear the yarn for captive consumption within the factory or clear the same outside the factory on payment of appropriate excise duty. 4.On 16th October, 1980, the Delhi High Court, delivered a judgment in the case of J.K. Cotton Spg. Wvg. Mills - 1981 (8) E.L.T. 887 holding that under Rules 9 and 49 of the Central Excise Rules, 1944 (1944 Rules for short) excise duty is not leviable on the yarn manufactured and cleared for captive consumption in a continuous uninterrupted and integrated process of manufacture. 5.In the light of the said judgment, the appellant filed a Writ Petition bearing No. 1063 of 1981 in the Delhi High Court seeking a declaration that excise duty is not leviable on the yar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any, arising on account of the retrospective amendment to Rules 9 and 49 would be subject to the limitation prescribed under Sections 11A and 11B of the Central Excise Act, 1944 ('1944 Act' for short). 9.Following the above decision rendered in the case of J.K. Cotton Mills, the Delhi High Court on 17th April, 1984 dismissed the Writ Petition filed by the appellant as well as several other textile mills by holding that the amendments to Rules 9 and 49 are valid and constitutional and recoveries for the past period would be subject to the provisions of Section 11A of the 1944 Act. 10.Challenging the decision of the Delhi High Court dated 17th April, 1984, the appellant filed a Special Leave Petition before the Apex Court. In the said Special leave petition, the Apex Court passed an interim order on 4th May, 1984 to the effect that there will be no stay in respect of future clearances and as regards the past dues, the Apex Court directed the appellant to pay 50% of the disputed duty by 31st August, 1984 and for the balance 50% of the disputed duty, directed the appellant to give a bank guarantee and bond to the satisfaction of the Registrar of the Apex Court. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been served and the claims are raised within a period of six months from the relevant date, the Revenue would be entitled to realise the dues. In case of dispute as to whether the notice under Section 11-A had been served or not the Assistant Collector will decide the issue. However, in cases where the notices have not been served as yet the Revenue would be entitled to do so within the time limit prescribed by Section 11-A of the Act. In either of the aforesaid eventualities orders will not be passed by the authorities without giving an opportunity to the assessee to make representations against the proposed orders. If notices have already been served for the aforesaid purpose the assessees would have eight weeks time from today to reply or to make a representation. The Bank guarantees furnished by the assessees shall be made available for realisation of dues, if any, by the Revenue. The interim orders shall stand modified as above. The appeals will stand disposed of accordingly, with no order as to costs . 13.As the liability to pay the excise duty on the yarn cleared for captive consumption was finally upheld by the Apex Court, the Range Superintendent proposed to fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e yarn was cleared for captive consumption on provisional assessment and, therefore, the revenue was entitled to finalise the provisional assessment and raise demand without issuing notice under Section 11-A of the 1944 Act. 18.Challenging the order passed by the Commissioner (Appeals), the appellant filed further appeal before CESTAT. There was a difference of opinion between the two members of the CESTAT and, therefore, the matter was referred to a third member. In the light of the decision given by the third member, the Tribunal by its order dated 1st July, 2005 [2006 (203) E.L.T. 610 (Tri.-Mum.)] upheld the order of Commissioner (Appeals) and dismissed the appeal filed by the appellant. Challenging the order of the Tribunal dated 1st July, 2005, the present appeal is filed. 19.To complete the narration of facts, it may be noted that the revenue has already recovered the balance of excise duty determined as payable on finalisation of the provisional, assessment on 19th May, 1995 by encashing the bank guarantees furnished by the appellant pursuant to the order passed by the Apex Court. 20.Mr. Patil, learned counsel for the appellant submitted that the question raised in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l especially when none of the grounds for making the provisional assessment under Rule 9B or 173B or 173C of the 1944 Rules existed. In this connection Mr. Patil relied upon a decision of the Madras High Court in the case of Chemicals Plastics India Ltd. v. Union of India [1994 (74) E.L.T. 549]. 22.Mr. Patil further submitted that provisional assessment can be resorted to before clearance of goods and not after clearance of the goods. In the present case, no provisional assessment order has been made under Rule 9B before clearance of the goods. It. is only after the clearance of the yarn for captive consumption under the self removal procedure when the appellant filed RT-12 returns at the end of the month, the excise authorities made endorsements on the RT-12 returns to the effect that the assessments were provisional. He submitted that in the absence of a provisional assessment order was passed before clearance of the yarn for captive consumption, it is not open to the revenue to contend on the basis of the endorsements made on the RT-12 returns that the assessments were provisional. This is because, RT-12 returns can be assessed provisionally only if there is a provisional a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal assessment has in fact been made. 26.Finally, Mr. Patil submitted that once it is established that during the relevant period the yarn was not cleared for captive consumption under provisional assessment, then, the excise duty recoverable under the amended Rules 9 and 49 as interpreted by the Apex Court in the case of J.K. Cotton Mills Ltd. reported in 1998 (99) E.L.T. 8 can be recovered only if a show cause notice has been issued within the period of limitation prescribed under Section 11A of the 1944 Act. In the present case, admittedly no show cause notice is issued under section 11A of the 1944 Act. Assuming that there was provisional assessment, Mr. Patil submitted that no show cause notice has been issued before finalisation of the provisional assessment and no show cause notice has been issued within six months from the date of adjustment on finalisation of the provisional assessment as mandatorily required under Section 11(A)(3)(ii)(b) of the 1944 Act. In this connection, Mr. Patil relied upon a decision of the Apex Court in the case of CCE v. ITC Limited reported in 2006 (203) E.L.T. 532. Accordingly, Mr. Patil submitted that in the absence of a provisional assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said decision was also dismissed. Thereafter, the appellants filed appeal against the finalisation of the provisional assessment before the Commissioner of Central Excise (Appeals). The said appeal was dismissed by the Commissioner of Central Excise (Appeals). Further appeal filed by the appellants was also dismissed by the CESTAT. Having failed in all the judicial proceedings, the appellant has filed the present appeal even though there is no merit in the appeal. In these circumstances, she submitted that it is not open to the appellant to contend that no notice has been issued for recovery of duty after the finalisation of the provisional assessment. 30.With reference to various decisions relied upon by the counsel for the appellant, Mrs. Masurkar submitted that the said decisions are distinguishable on facts, because in the present case, clearances were effected on provisional assessment basis and the same is recorded on the RT-12 return and therefore, the question of issuing notice under Section 11A of the 1944 Act did not arise at all. With reference to the decision of this Court dated 17-2-2005 in Central Excise Appeal No. 2 of 2001 (C.C.E. v. Morarji Gokuldas Spg . Wvg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty it was open to the assessing officer to make provisional assessment either on a written request made by the assessee or if the proper officer deemed it necessary to make further inquiry. In the present case, admittedly there was a dispute pending before the Delhi High Court regarding the excisability of the yarn cleared for captive consumption. Pending final decision of the Delhi High Court, it was open to the appellant to seek and to the proper officer to allow clearance of yarn for captive consumption on provisional assessment basis. In fact, in the B-13 Bond it is recorded that the appellant had sought provisional assessment. Even if the contention of the appellant that the B-13 Bond was executed at the instance of the excise authorities, is accepted, in view of the fact that a dispute was pending before the Delhi High Court, it was open to the proper officer to insist on clearing the yarn for captive consumption on provisional assessment basis. 35.The next question to be considered is, whether a provisional assessment order was in fact made before clearance of yarn for captive consumption on provisional assessment basis? It is not in dispute that during the period fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the assessments were provisional. 38.Strong reliance was placed by the appellant on the decisions of the Apex Court in the case of J.K. Cotton Mills reported in 1998 (99) E.L.T. 8 (S.C.), Coastal Gases Chemicals Pvt. Ltd. reported in 1997 (92) E.L.T. 460 (S.C.), CCE v. Hindustan National Glass Ind. Ltd. reported in 2005 (182) E.L.T. 12 (S.C.) and Metal Forgings reported in 2002 (146) E.L.T. 241 (S.C.). 39.At the outset, it may be noted that the observations made by the Apex Court in all the above cases regarding the issuance of notice under Section 11A of the 1944 Act was in the context of the excise duty that became payable on account of the Apex Court upholding the validity of the amendment to Rules 9 and 49 of the 1944 Rules with retrospective effect from 28-2-1944. Obviously, the said observations were meant to apply to cases where the final assessments were already made and not in respect of cases where the assessments were provisional, because duty liability is determined only at the time of final assessment. In other words, what is held in all the above cases is that, in spite of the retrospective amendment to Rules 9 and 49 is upheld, where the assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for fresh consideration. In the present case, there is voluminous evidence on record to show that the clearances were on provisional assessment basis and hence the reliance placed on the above decision is misplaced. 43.Similarly, the ratio laid down by the Apex Court in the case of Metal Forgings (supra) does not support the case of the appellant. In that case the Asstt. Collector had passed an order on 21-1-1976 to the effect that the goods manufactured by Metal Forgings were classifiable under Tariff Item 68. The said order was challenged in various proceedings by way of appeal/revision/writ petition and said proceedings continued till 2002. The question before the Apex Court was whether the order passed by the Asstt. Collector on 21-1-1976 was on provisional assessment basis and whether the clearances effected during the pendency of the above proceedings without following the procedure under Rule 9B could be said to be on provisional assessment basis? Admittedly, in the order passed on 21-1-1976, the Assistant Collector had not stated that he was classifying the goods under Tariff Item 68 on provisional assessment basis. Moreover, there was no material on record to show tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isional assessment was not even raised in that case. Therefore, reliance placed on the decision of the Apex court in the case of Kosan Metals (supra) is wholly misplaced. 45.As rightly contended by the counsel for the revenue, the dismissal of the Central Excise Appeal No. 2 of 2001 by this court in the case of Morarji Gokuldas Spg. Wvg. Mills Co. Limited (supra) was not on merits but on a concession made by the counsel for the revenue. The Apex Court in the case of Dr. K. Santakumari (supra) has held that wrong concession made by a counsel would not bind the parties. As the decisions in the case of Metal Forgings (supra) and J.K. Cotton Mills (supra) which were relied upon by the counsel for the revenue in the case of Morarji Gokuldas Mills (supra) are distinguishable on facts, the appellant cannot take advantage of the wrong concession made by the revenue in the case of Morarji Gokuldas Mills (supra). 46.Thus, in the facts of the present case, the revenue has clearly established that the clearances wore effected on provisional assessment basis and accordingly the finalisation of the provisional assessments after the dismissal of the Writ Petition filed by the appellant be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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