TMI Blog2018 (3) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... enue, having failed to issue any show cause notice, now cannot take the shelter of the bond executed by the Appellant in terms of the order passed by the Hon'ble Delhi Court. In absence of provisional assessment order, the demand of duty made against the Appellants is not sustainable. Appeal allowed - decided in favor of appellant. - E/305, 431/07 - A/85271-85272/2018 - Dated:- 9-2-2018 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri R.V. Desai, Sr. Advocate with Shri R.B. Pardeshi, Advocate - for Appellants Shri Ajay Kumar, Addl. Commr. (A.R) - for Respondent ORDER Per: Ramesh Nair The brief facts of the case are that the Appellants are engaged in the manufacture of Cotton Yarn of which major portion is consumed by them captively for the purpose of manufacture of Fabrics. The CBEC vide Circular dt. 24.9.1980 directed to levy duty on yarn manufactured and captively consumed which was challenged by the Appellant in the Hon ble Delhi High Court. The Hon ble High Court while admitting the said writ petition, granted interim relief directing the Appellant to pay the admitted excise duty and for the disputed excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve not been served with any demand in accordance with the order of the Hon'ble Supreme Court. The jurisdictional Asst. Collector vide letter dt. 16.9.88 informed the Appellants that they have furnished a bond pursuant to the Hon'ble Delhi High Court order in which they have bound themselves to pay to the President of India the duty of excise on yarn captively consumed by them but for the stay, and hence they are required to pay the duty. He further stated that the Appellants in their letter dt. 22.12.83 has confirmed that the said amount was outstanding and the Classification lists Nos.1 to 4 dt. 5.6.81 and No.5 dt. 16.7.81 were provisionally approved on 6.10.81. Further, that the Assessing officer for the period 6.6.81 to 14.3.83 had made certain remarks that till the Classification lists are approved finally the question of issue of notice u/s 11A of the Act within a period of six months does not arise. Subsequently, the Asst. Collector vide order dt. 8.12.88 purported to finally approve 5 classification lists in terms of the order of the Hon'ble Delhi High Court and Hon'ble Supreme Court order. He further ordered for recovery of duty of ₹ 80,12,847.83 to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the court and comparison of the same with the demand is perverse. He relies upon the Tribunal order No.C-1/1825-26/WZB/2000 dtd. 15.5.2000 in the case of M/s Morarjee Gokuldas Spinning Weaving Mills Ltd wherein similar facts the Tribunal referring to the Hon'ble Apex Court's judgment in case of M/s J.K. Cotton Spinning Mills Ltd held that even the Hon'ble Supreme Court's decision has not upset the above legal position. That is why even the clarificatory order by the Hon'ble Supreme Court dt. 28.04.1988 states that whenever the show cause notice is pending, finalization can be made within six months period. He submits that mere mentioning on the classification list as well as on the RT-12 returns that the assessments are provisional does not mean that the assessments are provisional since the provision of rule 9B has to be followed. He relies upon the judgment in the case of M/s Mafatlal Industries Ltd - 1990 (49) ELT 115 (Tri.) wherein it was held that the demand on RT12 monthly return is not valid, He also relied upon the judgment in the case of M/s Standard Mills Ltd - 2001 (137) ELT 516 (Tri), M/s Mihir Textiles Ltd - 1991 (52) ELT 89 (Tri) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levies from the assessee by issue of show cause notice. There is no other provision under which the duty can be determined and recovered from the assessee. The Revenue has taken a ground that the bond was executed by the Appellant in terms of order of the Hon ble Delhi High court and hence the duty demand is covered by the said bond. We are in agreement with the submissions of the Ld. Sr. Advocate that the order of the Hon'ble Delhi High Court for execution of Bond was only to the effect that the bond shall be under the relevant excise rules and not for provisional assessment under Rule 9B. The Department never resorted to provisional assessment under Rule 9B of the erstwhile rules nor completed the process or procedure laid-down under the Central Excise Rule 9B for provisional assessment. In fact the Revenue never directed the Appellants to execute the bond with any security or surety or such conditions that the Collector may approve for the provisional assessment of the goods under Rule 9B. In such case we are of the view that the assessment was not provisional in terms of Rule 9B. The order under rule 9B towards provisional assessment has not been issued and in that case it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over past dues we have to note that the amendment to Rules 9 and 49 with retrospective effect by Section 51 of the Finance Act 1982, has been upheld by the Supreme Court. It would not, therefore, be correct, in our view, to say that the authorities could not recover the dues for the pre-amendment periods on the footing that the right to recover past dues accrued to the authorities only with the amendment. Though the Board's circular No.18-A/82-CX dated 13.5.1982, following the Finance Act , 1982. says that demands for the PS amendment periods have to be made under Section 51(2)(d) of the Finance Act and not under Section 11A of the Central Excises Act (on the Board's understanding-mistaken as it turned out to be-that Section 11A did not apply to such demands) we have to see whether the Department acquired the right to make such demands only with the amendment. It is noteworthy that the Supreme Court has not ruled that the authorities acquired the right only with the amendment and that they had no such right prior to the amendment. At this stage, it is necessary to set out paras 32 and 33 of the Supreme Court s judgment. 32. It is. however, contended by the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Karnataka High Court in para 17 of its judgment in the Davangere Cotton Mills case has clearly held that the Explanation added to Rules 9 and 49 with the object of overcoming the effect of that rulings of Delhi and other High Courts was introduced by way of abundane caution. It was held that, even without the amendments, the legal position was that intermediate goods like yarn manufactured in a factory which were ultimately consumed in the manufacture of end products were liable to duty whether removed from the factory premises or otherwise (para 17). It was further held in para 18 of the Report that the Explanation to Rules 9 and 49 made explicit what was implicit in Section 3(1) of the Central Excises Act and the original Rules 9 and 49. The Explanation did not introduce any new concept but only clarified the earlier rules. 33. At this stage, it is necessary to set out Section 51 of the Finance Act, 1982: 51. Retrospective effect for certain amendments to Central Excise Rules and validation. - (1) The amendments made in Rules 9 and 49 of the Central Excise Rules, 1944, by notification of the Government of India in the Ministry of Finance (Department of Revenue) No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be valid and are saved. However, the provision does not save a case as the present one, where there is a Court decision in favour of the assessee. The recourse for the Department is in terms of Section 51(2)(d) only. The right to make demands in terms of this provision accrued only with effect from the amendment subject, of course, to the limitations contained in Section 11A of the Central Excises Act. Even pending notices are not saved by Section (2)(d) . In this connection, the Learned Counsel referred to the Supreme Court's order dated 28.4.1988 in C.M.P. No.8869 in Civil Appeal Nos.323 etc. Rohit Mills Ltd. v. Union of India and Ors.) 1988 (18) ECR 17 . The Court, in its order, has stated that in the light of the Courts observation in the J.K. Cotton Spinning Weaving Mills (supra) it would be proper to direct that in cases where notices under Section 11A have been served and the claims do not cover any period beyond six months from the respective dates of the notice, the respondents would be entitled to realise the dues. We do not see how this order advances the appellants' case. We have noted that in accordance with the Karnataka High Court's j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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