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Jalna Sahakari Sakhar Karkhana Ltd. Versus The Commissioner of Central Excise And Customs (formerly Collector of Central Excise and Customs)

2017 (9) TMI 453 - BOMBAY HIGH COURT

Recovery of duty u/s 11D - sugar incentive scheme - revenue contended that, appellant had collected the amount of ₹ 85/- per quintal, however, had deposited ₹ 52/- per quintal with the Central Government - Interpretation of Statute - It is the case of the appellant that the said sugar incentive scheme was commenced by the Government of India in terms of provisions of section 3 of the Essential Commodities Act, 1955 with an object to encourage indigenous sugar production and to achiev .....

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e - Whether the Tribunal committed error while interpreting and construing the provisions of Section 11-D of C.E.A., 1944, while ignoring the interpretation and construction of provisions of Section 5-A of C.E.A., 1944, granting exemption from duty of excise to the Appellant / Assessee which is required to be construed liberally while upholding the impugned order passed by the respondent Authority? - Held that: - It is not in dispute that when the Government of India, Ministry of Food and Ci .....

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t override the provisions of Section 11-D of the Central Excise and Salt Act, 1944, enacted by the Parliament - The learned Collector of Central Excise and Customs has rendered a finding that it was established that the excess amount was recovered and retained by all the assessees including the appellant herein representing the duty of excise as an incentive under the incentive scheme dated 4th November, 1987 illegally and thus the appellant was liable to pay the said amount as demanded in the s .....

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ollector of Central Excise and Customs has, after granting sufficient opportunity to the appellant, dealt with all the issues and fact as well as law and has rightly upheld the demand raised in the show cause notices issued by the authority. - Insofar as the submission of the learned counsel for the appellant that there was no opportunity to engage an Advocate was granted by the learned Collector of Central Excise and Customs is concerned, this submission of the learned counsel is ex-facie c .....

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its Advocate Shri K.P. Joshi. - The appellant did not file any proceedings for enforcement of the said incentive scheme before any Court of law. Be that as it may, in our view, the learned Collector of Central Excise and Customs has rightly held that no such incentive scheme, which was in the nature of executive instructions had in any event was subject to further notification to be issued by the Government could be given effect to while considering the provisions of Section 11-D of the Cent .....

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vocate, for appellant. Shri D.S. Ladda, Standing Counsel, for respondent. JUDGMENT (Per R.D. Dhanuka, J.) 1] By this first appeal filed under section 35-G of the Central Excise Act, 1944 (for short, the said Act ), the appellant has impugned the order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai in Appeal No. E-4606/94-SB-SRB dated 27th October 2005 dismissing the appeal filed by the appellant. 2] By an order dated 8th September, 2006, this Court f .....

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uphold the impugned order passed by respondent Authority, by committing error by misreading and misconstruing the provisions of section 11-D vis-a-vis the provision of Section 5-A of the Central Excise Act, 1944, by failing to construe the aforesaid provisions by adopting principle of purposive interpretation of the statutes in the interest of justice ? 3] Some of the relevant facts for the purpose of deciding this appeal filed under section 35-G of the said Act, which is numbered as first appe .....

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93 dated 27th April, 1983 as amended in terms of the incentive scheme issued by the Government of India, Ministry of Food and Civil Supplies. 5] On 4th November, 1987 the Government of India, Ministry of Food and Civil Supplies, Department of Food, New Delhi, issued an incentive scheme for new sugar factories and expansion projects licensed during Sixth Five-Year Plan period. It was provided that the 1987 Scheme will apply to all new sugar factories and Expansion Projects to whom letters of inte .....

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etween 1-10-1980 and 1985, subject to their fulfilling the conditions and requirements prescribed at A, B and C hereunder : 2.A In respect of both new factories & expansion projects: (i) For eligibility to incentives under the 1987 Scheme, the respective letter of intent as well as industrial licence should have been issued after 1-10-1980. Where letters of intent had been issued prior to 1-101980 but were converted into industrial licences after the said date, the eligibility to incentives .....

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nces based on the merits of individual cases. (iii) Sliding Scale of Incentives:- In the event delay in the ate said commencement production beyond the stipulated period of 39 months from the date of letter of intent or licence whichever is earlier, the grant o incentives would be regulated on a sliding scale in accordance with this Directorate's circular no. F.13/85-PC dated 1111-1985. (iv) Quantum of incentives free sale quota: The quantum of incentive under the 1987 Scheme by way of perce .....

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to retain the difference in excise duty as between levy and free sale sugar. in respect of the incentive resale quota in excess o the normal resale quota. (vi) In regard to the excise duty concessions under this Scheme, necessary notification would be issued by the Ministry of Finance (Department of Revenue) separately. 2.B New Sugar Factories: In respect of new sugar factories : (i) For eligibility to incentives under the 1987 scheme, the f.o.r. cost of plant and machinery shall not be below & .....

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insurance, octroi, sales tax, packing and forwarding charges in respect of plant and machinery and the erection thereto at the factory site, supervision, commissioning charges etc., and such other items of expenses as the Government may decide, will not be taken into account or determining the f.o.r. cost of plant and machinery. (iii) Scale of incentives free sale quota: The incentives by way of higher free sale quota, including normal resale quota o sugar are at percentages as given below for .....

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xures as may be prescribed by the Government, for verification of their entitlements. 7] It is the case of the appellant that the said sugar incentive scheme was commenced by the Government of India in terms of provisions of section 3 of the Essential Commodities Act, 1955 with an object to encourage indigenous sugar production and to achieve the target envisaged, whereby the said incentives under the said scheme was partly based on higher percentage of free sale sugar quota and partly on excise .....

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ued six notices-cum- demand to the appellant. In the said show cause notices, it was alleged that during the period between 20th September, 1991 and 31st January, 1992 and various period upto July, 1993, the appellant had cleared the white crystal sugar under incentive scheme by charging Excise duty as basic ₹ 17/-, additional ₹ 21/- and cess ₹ 14/- i.e. totaling to ₹ 52/- per quintal and debited the same to their P.L.A. account during the said period between 20-91991 and .....

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₹ 60,12,699/-. By those six show cause notices, the Superintendent, Central Excise and Customs, Jalna, directed the appellant to show cause as to why the differential excise duty of ₹ 60,12,699/- should not be recovered from the appellant under section 11-A of the said Act. The appellant was also directed to produce at the time of showing causes all the evidence upto date, the appellant would rely upon in support of their defences. The appellant was also directed to state in their re .....

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8377; 60,12,699/- in so far as the appellant is concerned. By the said order passed by the Collector of Central Excise and Customs, the demand was also confirmed in respect of seven other Assessees. 12] Being aggrieved by the said order dated 13th August, 1994 passed by the learned Collector of the Central Excise and Customs, the appellant herein filed an appeal under section 35-B of the said Act before the Customs, Excise, Gold (Control) Appellate Tribunal (West Region Bench) Bombay. 13] By an .....

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India, Ministry of Food and Civil Supplies (Department of Food), which is relied upon by the appellant for the purpose of availing of excise duty concession and would submit that the appellant having established a new factory was entitled to avail of the excise duty concession referred to in Clause 2A(v). He submits that the appellant was thus entitled to retain the difference in excise duty as between levy and free sale sugar and was only liable to pay the excise duty as applicable to levy sug .....

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e learned Collector, Central Excise and Customs, however, before passing the order on 13th August, 1994, did not give an opportunity to the appellant to produce various documents including the registers maintained by the appellant to show that such rebate was given by the appellant to its customers and no amount of the duty collected by the appellant was retained by the appellant. 16] It is submitted that the learned Collector of Central Excise and Customs did not give any opportunity to the app .....

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Central Excise, Aurangabad (1999) 4 SCC 103 and in particular paragraph nos.8 and 9 and would submit that the exemption notification issued by the Central Government u/s 3 of the Essential Commodities Act, 1955, requires purposive interpretation and cannot be read in isolation. He submits that the benefits in respect of the payment of excise duty already granted under the said notification dated 4th November, 1987, by the Central Government u/s 3 of the Essential Commodities Act cannot be taken .....

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anted under the said notification. In support of this submission, the learned counsel for the appellant placed reliance on the judgment of Andhra Pradesh High Court in case of Cuddapah Cooperative Sugars Ltd. v. Union of India & others (1988 (38) E.L.T., 257 (A.P.) and in particular paragraph nos.10 to 12. He submits that the said notification granting concession in payment of excise duty was issued in 1987 whereas Section 11-D was introduced in the Central Excise and Salt Act, 1944, for the .....

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Pvt. Ltd. & another v. State of Haryana & others (2006 (3) SCC 620) in support of his submission that pursuant to the exemption notification dated 4th November, 1987, issued by the Ministry of Food and Civil Supplies, the appellant has acted upon the said notification and had started a new factory and such benefit already accrued in favour of the appellant under the said exemption notification cannot be taken away by the Central Government purportedly u/s 11-D of the Central Excise and .....

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ct of pre-existing notification issued by the Central Government u/s 3 of the Essential Commodities Act, 1955. 21] Mr.Ladda, learned counsel for the Revenue, on the other hand, placed reliance on various findings recorded by the Collector of Central Excise and Customs in the impugned order and also the findings recorded by the said Tribunal in the impugned order dated 21.10.2005. He submits that the Collector of Central Excise has already considered in detail the effect of the said notification .....

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the non obstante clause provided in Section 6 of the Essential Commodities Act and has rejected the contention of the assessee rightly. 22] The learned counsel for the Revenue distinguished the judgment of the Supreme Court in case of Belapur Sugar and Allied Industries Ltd. (supra) on the ground that in that matter, the duty paid by the assessee was more and after such payment was made, the duty was reduced by the Central Government by issuing a notification. The Revenue had denied the benefit .....

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nsel for the appellant is concerned, he submits that the issue of alleged promissory estoppel raised by the appellant in this appeal could not have been adjudicated by the Collector of Central Excise and Customs. He submits that the appellant did not file any proceedings for enforcement of the said notification dated 4th November, 1987, issued by the Government of India, Ministry of Food and Civil Supplies. 24] The learned counsel for the Revenue submits that the appellant recovered excise duty .....

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he rate of ₹ 52/per quintal. He submits that u/s 11-D of the Central Excise and Salt Act, 1944, the appellant could not have retained any part of the duty collected by the appellant from the customers and was liable to pay the entire amount of such duty with the Revenue. 25] It is submitted by the learned counsel for the respondent that the judgment of the Supreme Court in case of Kisan Sahkari Chini Mills Ltd. (supra) squarely applies to the facts of this case. The Supreme Court had consi .....

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nd Customs is concerned, he submits that this submission of the appellant is factually incorrect. The appellant had appeared through its Advocate. The learned Collector of Central Excise and Customs had already granted opportunity to the appellant to produce the relevant documents in support of their case before the authority. The appellant thus cannot make any grievance before this Court that no such opportunity was given by the authority to produce the relevant documents. 27] It is not in disp .....

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nd Customs to the appellant clearly indicates that it was the case of the authority that the appellant had collected the excise duty at the rate of ₹ 85/- per quintal and had paid at the rate of ₹ 52/- per quintal to the Government and thus the differential amount of ₹ 33/- per quintal was liable to be deposited by the appellant with the authority. The said show cause notices also indicate that the appellant was directed to produce at the time of showing cause all the evidence .....

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said reply, it was alleged by the appellant that the appellant had not charged to its customers at the rate of basic ₹ 34/- plus additional ₹ 37/- and cess of ₹ 14/-, totaling to ₹ 85/- per quintal and had deposited ₹ 52/- per quintal with the Central Government. It was mentioned that the appellant was ready to appraise its billing system in which it had shown rebate to its customers accordingly. 30] A perusal of the order dated 13th August, 1994, passed by the Coll .....

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the assessees. Shri K.P. Joshi Advocate had appeared on behalf of the appellant alongwith its representatives before the learned Collector of Central Excise and Customs who had made various submissions. 31] The learned Collector of Central Excise and Customs had observed that all the assessees had availed of the benefits of the incentive scheme dated 4th November, 1987 for payment of concessional rates of duties in terms of notification Nos.130/1983 and 131/1983, both dated 27th April, 1983, and .....

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s of excise as provided by Section 11-D of the Central Excise and Salt Act, 1944, had been established beyond doubt. 32] In the said impugned order, the learned Collector of Central Excise and Customs also considered Clause 2A(vi) of the said incentive scheme, which provided that in regard to the excise duty concessions under the said scheme, necessary notification would be issued by the Ministry of Finance (Department of Revenue) separately. The learned Collector of Central Excise and Customs r .....

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to clear the sugar bags covered under additional entitlement under the incentive scheme at the concessional rates prescribed in the notifications. 33] In the said impugned order, the learned Collector of Central Excise and Customs also held that the said incentive scheme dated 4th November, 1987 was without the support of any statutory provision of the Act of the Parliament making specific provisions for such collection and retention thereof. It was not mentioned in the said notification that t .....

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Ministry of Food and Civil Supplies and thus it could not override the provisions of Section 11-D of the Central Excise and Salt Act, 1944, enacted by the Parliament. The learned Collector of Central Excise and Customs relied upon the judgment of the Supreme Court in case of Bindeshwari Ram v. State of Bihar & others (1990 (27) E.C.R. 82 (S.C.) holding that the executive instructions cannot prevail over the statutory rules and in absence of statutory rules, executive instructions have no re .....

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by the learned Collector of Central Excise and Customs indicates that the said authority has also considered the non obstante clause in Section 11-D of the Central Excise and Salt Act, 1944 and the non obstante clause provided in Section 6 of the Essential Commodities Act, 1955 and has held that the non obstante clause in Section 11-D of the Central Excise and Salt Act, 1944, which has been enacted after the Essential Commodities Act, 1955, is later one and is more specific and thus will overrid .....

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a ground that the appellant had not charged their customers for excess collection as duty, but had collected rebate as per incentive scheme, 1987, the appellant did not produce any record before the said Tribunal. The said Tribunal has also recorded a finding that the appellant had retained the differential amount collected by them in accordance with the sugar incentive scheme dated 4th November, 1987 and has not deposited the entire amount with the Revenue. The said Tribunal has followed the pr .....

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xcise and Customs as well as the said Tribunal have not considered such documents. In our view, the Collector of Central Excise and Customs has, after granting sufficient opportunity to the appellant, dealt with all the issues and fact as well as law and has rightly upheld the demand raised in the show cause notices issued by the authority. 38] A perusal of the record indicates that no such record was produced by the appellant though in the show cause notices itself, the appellant was called upo .....

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the appellant at this stage to rely upon such documents, which were not produced in spite of an opportunity granted by the authority to the appellant. 39] In our view, the learned Collector of Central Excise and Customs has rightly held that sub-clause (v) of Clause 2A of the said incentive scheme has to be read with sub-clause (vi), which had made it clear that in regard to the excise duty concessions under the said scheme, necessary notification would be issued by the Ministry of Finance (Depa .....

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ate was granted by the learned Collector of Central Excise and Customs is concerned, this submission of the learned counsel is ex-facie contrary to the averments made in paragraph no.8 of the appeal memo filed by the appellant before the said Tribunal, in which it has been admitted that the said Collector of Central Excise and Customs had heard the appellant through their Advocate in those six show cause notices. A perusal of the order passed by the learned Collector of Central Excise and Custom .....

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cerned, in our view, such issue could not have been raised before the Collector of Central Excise and Customs by the appellant. The appellant did not file any proceedings for enforcement of the said incentive scheme before any Court of law. Be that as it may, in our view, the learned Collector of Central Excise and Customs has rightly held that no such incentive scheme, which was in the nature of executive instructions had in any event was subject to further notification to be issued by the Gove .....

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