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1989 (1) TMI 365

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..... nt) was subject to the provisions of Section 11A of the Central Excises and Salt Act (hereinafter referred to as the Central Excises Act) which dealt with limitation in respect of demands for duty. 3. The appellants are manufacturers of cotton yarn, cellulosic yarn and non-cellulosic yarn which they captively consume within their factory for production of fabrics. The appellants challenged the levy of Central Excise duty on yarn captively consumed in the manufacture of fabrics in their composite mill by way of a writ petition No. 664/79 before the Delhi High Court. The High Court allowed the petition by its judgment dated 16.10.1980 reported in 1981 ELT 887. The Court held that no excise duty could be levied on yarn captively consumed in the manufacture of fabric. Following the judgment, the appellants stopped paying excise duty with effect from 6.11.1980 on yarn so consumed captively. The Department thereupon filed a SLP against the High Court judgment (SLP No. 57/81). This SLP is stated to be still pending admission in the Supreme Court. In the meanwhile, three show cause notices were issued by the Department, all dated 4.5.1981, followed by three addenda all dated 5.5.1981, u .....

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..... l be no stay Insofar as past dues are concerned, 50% of the dues shall be paid to the authority concerned within a period of three months from today. In regard to the balance of 50%, the appellants shall give bank guarantee to the satisfaction of the Registrar of this Court within the same period. It the bank guarantee has already been given in any case, in pursuance of direction of the High Court, it will continue in operation and shall be kept alive from time to time. The matter was finally disposed of by the Supreme Court by its judgment dated 10.10.1987 reported in 1987 (32) ELT 234 (SC) = 1987 (13) ECR 1280] As noted earlier, the Court upheld the validity of the retrospective amend meant to Rules 9 and 49 but held that the provisions of Section 11A of the Central Excises Act would apply to recoveries of duty. 4. By its order dated 5.12.1988 in Civil Miscellaneous Petition No. 21824/88 (in C.A. No. 297/83), the Supreme Court directed the Tribunal to dispose of the present 4 appeals within 2 weeks. By its further order dated 16.12.1988, the Court was pleased to extend the time for disposal of the appeals till 12.1.1999 and, later, to 31.1.1989. Hence, we have taken thes .....

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..... for manufacture of fabrics without paying duty on the yarns. It further referred to the issue of the earlier show cause notices for the period from 6.11.1980 to 31.3.1981. It also stated that the Delhi High Court had granted a stay order restraining the Department from levying and collection of duty on the yarn captively consumed . It also referred to the amendment of Rules 9 and 49 and Section 51 of the Finance Act, 1982. The demand was made in terms of Section 51(2)(d) of the Finance Act. 7. It is the submission of Shri Ravinder Narain, the learned Counsel for the appellants, that the effect of Section 51 of the Finance Act was that, while it protected all assessments and collection of duty prior to the Delhi High Court's judgment, in a case such as the present one, where there was Court judgment in the appellants favour, the right for the Department to recover dues not paid flowed only from Section 51(2)(d). This right accrued to the Department only with effect from the date of the amendment and was subject to the limitation in Section 11A as held by the Supreme Court. Apart from Section 51(2)(d) of the Finance Act, there was no provision enabling the Department to reco .....

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..... issions, G.V. Naik, Learned Departmental Representative, submitted at the outset that in these four appeals the extended time limit of 5 years in terms of the proviso to Section 11A(1) of the Central Excises Act was not in issue, since the Department had not sought to invoke the said proviso. The issue was one of determining whether the demands were covered by the normal period of limitation In this context, he drew our attention to the Explanation to Section 11A(1) which reads as follows: Where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be. It was his submission that in view of the Delhi High Court's stay order dated 12.8.1981, the Department was restrained from taking any action in the matter. (This point will be elaborated a little later). 9. With regard to appeal No. 2353/88-D, Shri Naik submitted that show cause notices dated 4.5.1981 and the addenda dated 5.5.1981, covering the period from 6.11.1980 to 31.3.1981, were dealt with by the Assistant Collector in Order-in-Original No. l9/Demand/87 dated 29.12.1987. These show caus .....

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..... upon and proceeded with, if at all, only after the disposal of the SLP by the Supreme Court. The Department had, however, proceeded on the footing that Section 51(2)(d) of the Finance Act 1982, provided the requisite authority for demanding duty for the past period. It was on this basis that the show cause notice of 5.6.1982 covered the period from 6.11.1980 to 31.3.1981 as well, which was the period also covered by the earlier show cause notices of 4.5.1981. It was the Department's own contention before the Supreme Court that the right to recover duty accrued only with the amendment and, in terms of the Supreme Court's judgment, the demand could be made only for a back period of 6 months. That the understanding of the Department was that the right to recover past dues accrued only with the amendment was borne out also by the Board's circular. In these circumstances, the Counsel contended, only the show cause notice of 5.6.1982 which was the one adjudicated by the Department and which was under Section 51(2)(d) of the Finance Act, was relevant for the purpose. The earlier notices must, in the circumstances, be deemed to have lapsed. In this context, he relied upon the .....

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..... appellants and was actually stayed by the High Court. The Department could have issued notices of demand as they had done on 4.5.1981 but it did not. If the Department wanted to have the benefit of the Explanation to Section 11A(1) of the Central Excises Act, it must show that it was, in fact, prevented by an order of the Court from serving any demand notice on the appellants. 16. Shri Ravinder Narain then submitted that even if it was held that the Department was indeed restrained by the Court from issuing demand notices, the show cause notice of 5.6.1982 must be considered to be invalid because a notice must be preceded by assessments occasioning short levies but, in the present case, there were no assessments. Reading the relevant paras of the Order-in-Original, Shri Ravinder Narain submitted that the Assistant Collector had stated that the assessments were provisional because the matter was sub judice. To say that the matter was sub judice and the assessments were, therefore, provisional would not be correct since there were specific provisions in the law for making assessments provisional and these provisions had neither been invoiced nor complied with. Further, it was clea .....

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..... . It pertained to a case where no hearing had been given, which was not the case here, For the rest, Shri Naik reiterated the contents of the impugned order in opposing this appeal. 19. In his rejoinder reply, Shri Ravinder Narain submitted that in respect of the period 1.4.1981 to 5.12.1981, the only show cause notice was of 5.6.1982 which, in terms, had invoked Section 51(2)(d) of the Finance Act, 1982, and not the proviso or the Explanation-I to Section 11A(1) of the Central Excises Act. The ingredients required for invoking the Explanation had not been alleged in the notice nor was the Explanation, In terms, invoked. He reiterated that the fact of the subject matter being sub Judice would not have the effect of making the assessments provisional. It only meant that the dispute was pending before the Court. It would not have the effect of restraining the Department from serving demand notices unless there was a specific stay order to that effect. The Superintendent, in his order dated 18.12.1987, had purported to finalize the so called provisional assessments and the Assistant Collector's order and Collector's order were consequent to the Superintendent's order. I .....

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..... ts. The submissions of the appellants had not been dealt with in the impugned order by the Collector (Appeals). Before finalizing the so called provisional assessments, the Superintendent had not issued a show cause notice. Under Section 11A, opportunity should be afforded prior to the order calling upon the assessee to pay duty and not afterwards In short, the submission was that before the finalization of the so called provisional assessments, a show cause notice was imperative although the rule might be silent on the point. In this context, the Supreme Court's judgment in the case of Madhu Milan Syntex (supra) was relied upon. 23. In his reply, Shri Naik, Learned Jt. CDR, submitted that the Superintendent's order finalising the provisional assessments was consequent to the Supreme Court's judgment in the appellants' case. The Superintendent's order should be treated as an interim order in the context of the Assistant Collector's order-in-original in which he had referred to the Superintendent's order and passed an order confirming the demand covering the same period after giving hearing to the appellant. 24. Shri Naik cited para 9 of the Supreme .....

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..... dered the submissions of both sides and perused the records. We shall deal with each appeal separately. 27. Appeal No. 2353/88-D This deals with the period from 6.11.1980 to 31.3.1981. The three show cause notices dated 4.5.1981 and their addenda dated 5.5.1981 refer. Purely going by arithmetical computation, these notices are not barred by limitation under Section 11A of the Central Excises Act. They are within time. The Counsel's contention is that these notices lapsed on the issue of the show cause notice of 5.6.1982 which, inter alia, covered also the period specified in the three notices. According to the Counsel, the notice of 5.6.1982 rightly invokes Section 51(2)(d) of the Finance Act, 1982, because the Department acquired the right to demand past dues only with the amendments especially in the appellants' case in view of the Delhi High Court's judgment in their favour which is under challenge in SLP before the Supreme Court. It is the further contention that the pending notices of 4.5.1981 are not saved by Section 51 of the Finance Act in the present case. 28. We are unable to agree with the Counsel's contentions. The 4.5.1981 notices were not sp .....

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..... d. The lower authorities had superseded the show cause notice already issued on more than one occasion and modified one show cause notice even on the very date of its issue. It was, therefore, that the Tribunal accepted the appellants' contention that for the purpose of limitation, should the need arise, the relevant date would be the date on which the final show cause notice was issued to the appellants. In the present case, the show cause notices of 4.5.1981 and the addenda of 5.5.1981 were not superseded, withdrawn or cancelled. The comprehensive show cause notice of 5.6.1982 no doubt included also the period covered by the previous notices of 4.5.1981 but the latter notices were separately adjudicated upon. The facts and circumstances not being analogous to those in the Bramac Suri case, the Tribunal's decision cited by the Counsel has no application to the present dispute and the 4.5.1981 notices cannot be said to have lapsed with the issue of the 5.6.1982 notice. In view of this finding, we do not propose to discuss the Tribunal's decision in Collector of Central Excise, Meerut v. Sitar Mills Ltd . cited by the Learned Jt. CDR. 31. Shri Ravinder Narain has cit .....

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..... the first time on February- 20, 1982 the cause of action for the Excise authorities to demand Excise duty in terms of the amended provision, arose on that day, that is on February 20, 1982 and, accordingly, the authorities are entitled to make such demand with retrospective effect beyond the period of six months. But such demand, though it may include within it demand for more than six months, must be made within a period of six months from the date of the amendment. 33. There is no provision in the Act or in the Rules enabling the Excise authorities to make any demand beyond the periods mention in Section 11A of the Act on the ground of the accrual of cause of action. The question that is really involved is whether in view of Section 51 of the Finance Act, 1982. Section 11A should be ignored or not. In our view Section 51 does not, in any manner affect the vision of Section 11A of the Act. In the absence of any specific provision overriding Section 11A, it will be consistent with rule? of harmonious construction to hold that Section 51 of the Finance An/1982 in so far as it gives retrospective effect to the amendments made to Rules 9 and 49 of the Rules, is subject to the pro .....

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..... o have always had effect on and from the date on which the Central Excise Rules, 1944, came into force. (2) Any action or thing taken or done or purporting to have been taken or done before the 20th day of February, 1982, under the Central Excises Act and the Central Excise Rules, 1944, shall he deemed to be, and to have always been, for all purposes, as validly and effectively taken or done as if the amendments referred to in Sub-section (1) had been in force at all material times and, accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority- (a) all duties of excise levied, assessed or collected or purporting to have been levied, assessed or collected before the 20th day of February, 1982, on any excisable goods under the Central Excises Act, shall be deemed to be, and shall be deemed to have always been, as validly levied, assessed or collected as if the amendments referred to in Sub-section (1) had been in force at all material times. (b) no suit or other proceeding shall be maintained or continued in any court for the refund of, and no enforcement shall be made by any court of any decree or order .....

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..... to claim past dues even prior to the amendment. This is what the show cause notices of 4.5.1981 sought to do. Those notices did not lapse and have been adjudicated upon. Also, those notices were well within the time limit laid down in Section 11A of the Central Excises Act. They were not under Section 51(2)(d) of the Finance Act, 1982. Only in the event of it being held that the Department acquired the right to claim past dues only with effect from the date of the amendments would the Counsel's submission be relevant. But we have seen that the Karnataka High Court has held otherwise. 34. Now, Section 51(1) of the Finance Act, 1982, clearly provides that the amendments to Rules 9 and 49 by Notification dated 20.2.1982 shall be deemed to have, and to have always had, effect on and from the date on which the Central Excise Rules, 1944, came into force. Further, Sub-section (2) provides that any action or thing taken or done or purporting to have been taken or done before 20.2.1982 under the Central Excises Act and the Central Excise Rules, shall be deemed to be, and to have always been, for all purposes, as validly and effectively taken or done as if the amendments referred to .....

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..... Act. In this view of the matter, we do not find anything wrong in the Department seeking to recover past dues in terms of the 4.5.1981 notices. We do not find substance in the counsel's submission that the department is restrained from recovering the duty in view of the pendency in the Supreme Court of the Department's SLP No. 57/81 against the High Court's judgment in Writ Petition No. 664/81 in the appellants' favour No. stay order of the Supreme Court has been placed before us. Besides, the very issue of dutiability of the yarn captively consumed by the appellants themselves, came up before the Supreme Court in C. A No. 297 of 1983, disposed of by the judgment re-ported in 1987 (32) ELT 234 (SO, and the ratio of the Court's judgment has already been noted earlier. Of course, it goes without saying that any order we pass in the present appeals will be subject to such directions or orders as the Supreme Court may be pleased to give in future. 36. In the result, we hold that the demands made in the notices of 4.5.1981, read with the addenda dated 5.5.1981, have been correctly confirmed. We dismiss the present appeal. Appeal No. 2354/88 D 37. The pe .....

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..... a Court Taking up the second aspect first, we have already noticed the prayer of the petitioners (present appellants) before the Delhi High Court and the Court's order. The show cause notice of 5.6.1982 says that the appellants filed writ petition No 1858/81 in the Delhi High Court on the issue of the show cause notices of 4.5.1981 and obtained a stay order of 12.8.1981 restraining the Department from levying and collecting duty on the yarn captively consumed The Assistant Collector's order in original (No. 20/Demand/87 dt 29 12 1987i which is the order relevant to this appeal states that pending the decision of the Supreme Court in the S.L.P. filed by the Department, the assessments for the period from April 1V81 to February 1982 were made provisional It says since the matter was sub judice all the assessments for the period April 1981 to 15.3.1983 were, therefore, made provisional The Supreme Court's judgment of 30.10.1987 made the appellants liable for payment of duty on yarn captively consumed in their composite mills Then the notice says: Accordingly the provisional assessments for the period April 1981 to 15.3.1983 were made final by the Superintendent by his ord .....

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..... g duty on goods captively consumed, in terms of the above 2 paras of the Board's letter which envisaged charging duty on such goods. Since no show cause notice could be issued after the order of the High Court, the Department was in a position to issue a show cause notice only with the amendment of the Rules on 20 2 1982 which was given retrospective effect by the Finance Act. The Court's order thus amounted to stay of service of notice by an order of a Court as required in the Explanation to Section 11A(I) of the Central Excises Act and, therefore, the period upto the date of amendment should be excluded in computing the period of 6 months for demanding the dues not paid. 42. In our considered view, the High Court's order amounts to restraining the Department from serving notices of demand on the appellants. We have noted the prayer of the petitioners (the present appellants) before the Court and the Court's order. The effect of the Court's order is to- (a) permit the petitioners to further process yarn in their composite mill in the manufacture of fabrics at nil rate of duty and to clear cotton fabrics only (without payment of duty on cotton yarn). .....

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..... ourt granted the prayer of the petitioners (the present appellants) restraining the Department from taking any action or proceedings pursuant to and/or on the same basis as the contents of the Boards directive, it follows that the Court was in effect, though not spelt out in so many words, restraining the Department, inter alia, from serving notices on the appellants under Section 11A of the Central Excises Act 43. Shri Ravindra Narain has, in support of his contention that the Department should produce an order of the Court staying issue of notices of demand before it can claim the Protection of the Explanation to Section 11A(1) of the Central Excises Act, relied on the Supreme Court's Judgment in Siraj-ul-Haq Khan and Ors. v. The Sunni Central board of Waqf U.P. and Ors. . This judgment is with respect to Section 15 of the Limitation Act which provides for the exclusion of time during which proceedings are suspended . It lays down : In computing the period of limitation prescribed for any suit or application for the execution of a decree, the institution or execution of which has been staved by injunction or order the time of the continuance of the injection or order, t .....

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..... oners were directed, for the first time, to execute bank guarantees by the Supreme Court's interim order dated 15.3.1983. Though the Court's order for execution of bank guarantees and for payment of 50% of the dues was in respect of past dues, we have to note that during the period material to the present dispute, that is, the period till 19.2.1982, there was no order of any Court directing the petitioners to execute bank guarantees. The Supreme Court's interim order of 15.3.1983 cannot evidently have the effect of having stayed service of notice on the appellants during the material period which was prior to the date of the order. 45. In support of his contention that the period covered by the Delhi High Court's interim order should be excluded for the purpose of computation of limitation, Shri Naik relied on the Supreme Court's judgment in Grindlays Bank v. Income Tax Officer, Calcutta and Ors .. The Supreme Court has observed that the interests of justice require that any under served or unfair advantage gained by a party invoking the jurisdiction of the Court, by the circumstance that it has initiated proceedings in the Court, must be neutralized. The si .....

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..... this context it is relevant to note 2 judgments of the Supreme Court. One was in the case of East India Commercial Co. Ltd. Calcutta v. Collector of Customs, Calcutta 1983 ELT 1342 (SC) : 1984 ECR 138. In para 29 of the report the Court has observed as follows: We, therefore, hold that the law declared by the highest Court in the State is binding on authorities or Tribunals under and they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. If that be so, the notice issued by the authority signifying the launching of proceeding contrary to the law laid down by the High Court would be invalid and the proceedings themselves would be without jurisdiction. This judgment was delivered in 1962. These observations were reiterated by the Supreme Court in Shri Baradakanta Mishra v. Bhimsen Dixit . It may thus be seen that the Department could not have issued any notice of demand to the appellants until and unless the Delhi High Court's order was stayed or reversed by the Supreme Court. In this particular case, as it happens, Delhi High Court had passed an interim order which had the effect, inter alia, of retraining the Dep .....

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..... cribed in Section 11A of the Central Excises Act. The above quoted order was passed on these petitions. The significance of the Departmental Representative's reliance on this order is not clear. It may be seen that the Supreme Court did not rule on the specific point raised in the petitions but left it to the Govt. to consider. The Departmental Representative has also referred to the Rajasthan High Court's judgment in a matter (Civil Writ Petition No. 4441/88 Modern Suitings v. Union of India and Ors. similar to that before the Supreme Court in the Civil Miscellaneous petitions referred to earlier. It is seen from the order that the High Court has stated that they need not go into the question whether Section 11A of the Central Excises Act is or is not attracted. The Court has, however, said it would not be proper nor equitable for it to do so or make an order that the bank guarantee executed by the petitioners in pursuance of the stay order should not be encashed. The Court had not gone into the question of applicability of Section 11A of the Central Excises Act. In the present case, we have to consider the question of limitation and, we have recorded our views earlier. .....

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..... ation I to Section 11A(1) of the Central Excises Act. This is understandable in view of the contents of the Board's circular dated 13.5.1982 which states that demands for duty in respect of excisable goods captively consumed for the manufacture of other goods would not attract the mischief of the limitation in Section 11A of the Central Excises Act in view of the provisions of Section 51(2)(d) of the Finance Act, 1082 We him already noted that the Supreme Court has expressly negatived the contention of the Revenue that the demands would not be subject to he Section in Section 11A of the Central Excises Act. 51. Shri Ravindra Narain cited the Madras High Court judgment in Light Roofing Ltd. v. Superintendent of Central Excise 1981 ELT 738 and the Tribunal's order in Jay Engineering Works. Calcutta v. Collector of Central Excise, Calcutta that it is necessary to allege and prove the ingredients laid down in Section 11A of Central Excises Act, to invoke the extended limit of 5 years The Department admittedly is not invoking in these proceedings the extended period of 5 years. These decisions are therefore, of no relevance 52. The endorsements on the RT 12 Returns regar .....

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..... in the P.L.A. could, on the facts of the case, be held to be merely provisional, what took place could not be held to be a provisional assessment within the meaning of Rule 10B, which contemplated the making of an order directing such assessments after application of mind. The Court further held that from the provisions Section 4 of the Central Excises Act read with Rule 10A, an implied power to carry out or complete an assessment, not specifically provided for by the rules, could be inferred. During the period material to the present case, Rule 10A did not exist. The ratio of the judgment is not applicable. 53. Shri Naik relied also on the Bombay High Court's judgment in D.R. Kohli v. Krishna Silicate and Glass Works and Anr. 1983 ELT 216. Explaining the scope of Rule 10A, the Court held that the Rule dealt with only collection and not with ascertainment of any deficiency in duty or its cause by a quasi judicial procedure. It was further held that if the facts showed that it was a case of incomplete assessment which was sought to be completed according to law, such a case was covered by the residuary Rule 10A and Rule 10 had no application. In the present instance, Rule 10A .....

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..... se, the assessments must be held to have been provisional. He submits that the facts and circumstances of the case warrant a liberal and not a literal construction of the provisions relating to provisional assessment in Rule 9B. In our opinion, it is not the endorsements on the RT 12 Returns (none existed at the material time) that make the assessments provisional but a substantive if not a literal compliance with the provisions of Rule 9B. For invoking Rule 9B, an order of the proper officer directing the assessments to be provisional is necessary. None, as already noted, existed in the present instance. 57. Shri G.V. Naik has cited the Bombay High Court's judgment in Premier Automobiles v. Union of India and Ors. in support of his contention that though the assessments might not be provisional but final, it was open to the Department to reopen the assessments. We are unable to accept this contention. The circumstances in the Premier Automobiles case were peculiar, necessitated by the issue of a statutory price control order by Government, on the sale price of motor vehicles. The assessments at the time of clearance of the motor cars were admittedly final and not provisio .....

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..... stances where the identity of the assessee in respect of a particular income is in doubt. Here, no such circumstance existed. Mere endorsements on RT 12 Returns at a subsequent date do not amount to protective assessments . The procedure laid down in Rule 9B (which verily partakes the character of protective assessments in the circumstances set out therein) has to be followed. It seems to us that the decisions cited are of no help to the Department. 60. We are unable to accept the contention of the Counsel for the appellants that the Department could not issue notices for demanding duty) since there was no assessment. The contention is that only in the event of] non-levy or short-levy following an assessment made, could a notice demanding duty non-levied or short-levied be issued. In the present case, duty was not levied and collected following the Delhi High Court's judgment. Further the Department was restrained from initiating proceedings for levy of duty. When Section 51 of the Finance Act came into force, the Department invoked Sub-section 2(d) thereof to recover dues which had not been collected but which would have been collected If the amendments referred to in Su .....

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..... er, the appellants took up the matter in appeal before the Collector (Appeals) praying that the order should be set aside insofar as it directed payment of the amount since the amount had already been paid. In his order-in-appeal, the Collector (Appeals) has observed that the Assistant Collector and the Superintendent were justified in apportioning the amount deposited by the appellants to the demands raised by the Department earlier and which were finalised in the respective R.T. 12 returns as required under the provisions of Rule 9B and 173-1. 63. Shri Ravinder Narain contends that while the appellants do not dispute their liability to pay duty on the yarn captively consumed during the period from 20.2.1982 to 15.3.1983 and had also paid the amount, their grievance is against the arbitrary adjustment of the payments so made against the time-barred and disputed demands. Their further grievance is that the Department, after having made the arbitrary adjustments, had raised further demands for payment of duty for the same period for which they had already made payments. In his reply, Shri Naik submitted that the Department was within its rights to adjust the amounts paid by the .....

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..... ppellants' plea that they should have been issued, show cause notice and given an opportunity to put forth their case before finalisation of the purported provisional assessments, did not hold good since there was independence(sic) or separate order in this case passed but the appellants were only apprise of the position of the issue for which adjudication proceedings were held . 66. Before us, Shri Ravindera Narain contends that the Collector (Appeals) had not dealt with the material submission made by the appellants in their memorandum of appeal. In short their submission is that there was no order of provisional assessment prior to the clearance of the goods and that the procedure laid down in Rule 9B not having been fallowed there could have been no provisional assessment and therefore no question of finalisation of the purported provisional context, Shri Ravindera Narain places reliance on the Supreme court's judgement in Union of India v. Madhu Milan Syntex according to which a show cause notice and opportunity are a must for finalisation of proceedings under Section 11A of the Central Excises Act. Likewise, the Counsel submits, the finalisation of provisional a .....

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..... cements of the Supreme Court, it was necessary that the Superintendent should have, prior to passing the order of finalisation of assessments, issued a notice and given due opportunity to the assessee to make its submissions. 71. We do not also agree with the Department's submission that the Assistant Collector had made good the defect, if any, in the procedure followed by the Superintendent. The appeal against the Assistant Collector's order in question has already been dealt with. In so far as the present anneal is concerned, we have to hold that the Superintendent's order was vitiated by lack of compliance with the principles of natural justice. 72. In the result, we set aside the order dated 18.12.1987 of the Superintendent and modify the order of the Collector (Appeals) to this extent We make it clear, however, that the Department will be at liberty to hold proceedings against the appellants in accordance with law, in respect of dues, if any, from them for any period covered by the Superintendent's order' but not covered by our orders in respect of the appeal Nos. 2353, 2354 and 2355 of 1988. 73. To sum up:- (a) Appeal No. 2353/88-D We h .....

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..... therein. (In A. No. E/2355/88-D). 77. In the result the appeal is dismissed. Appeal No. 2354/88-D 78. While agreeing with the conclusion recorded by the Hon'ble Sr. Vice-President that the Show Cause Notice dated 5.6.1982 was not barred by limitation under Section 11A of the Central Excises Salt Act 1944 even for the period from 1.4.1981 to 5.12.1981 (as was contended by the learned Counsel for the appellants) I would like to state that I do not agree that the two judgments of the Hon'ble Supreme Court recorded in the case of East India Commercial Co. Ltd. Calcutta v. Collr. of Cus ., 1983 ELT 1342 : 1984 ECR 138 and Shri Baradakanta Mishra v. Bhim Sain Dixit are relevant as recorded by him in para 46 of his judgment as in my opinion the said cases have no relevancy to the issue in question as they deal with a different situation and would further like to record my own reasons as under. 79. The short question involved in this appeal is whether the demand of duty from 1.4.1981 to 5.12.1981 made in the Show Cause Notice dated 5.6.1982 was within time. It was contended by the learned Counsel for the appellants that the said demand being beyond the stipulate .....

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..... iled appeals in the Hon'ble Supreme Court for grant of special leave to appeal. In the instant case the Government also filed a Special Leave Petition against the said judgment of the High Court (S.L.P. No. 57/81). This S.L.P. is stated to be still pending admission in the SC-a fact admitted by both the parties. It appears that after filing the S.L.P. against the said judgment passed by the Delhi High Court dated 16.10.1980 as aforesaid, the department issued a demand-cum-show cause notice dated 4.5.1981 demanding duty for a period from 6.11.1980 to March 1981. On the next date an addendum to the said show cause notice was issued. In that show cause notice it was mentioned that the same is being issued without prejudice to the decision of Hon'ble Supreme Court that may be taken in regard to S.L.P. filed by the department and no action to determine the demand for the amount and for the period covered in the show cause notice will be taken till such time the decision is taken by the Hon'ble Supreme Court. After the service of this notice the appellants filed their Writ Petition No. 1858/81 challenging the said demand made by show cause notice dated 4.5.1981 as amended by .....

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..... to the balance of the 50 per cent, the appellants shall give Bank Guarantee to the satisfaction of the Registrar of this Court within the same period. If the Bank Guarantee has already been given in any case in pursuance of the directions of the High Court, it will continue in operation and shall be kept alive from time to time..... 81. Ultimately the Supreme Court by its judgment dated 30.10.1987 (since reported in 1987 (32) ELT 234 ) rejected the said writ petition of the appellants and confirmed the Judgment of the Delhi High Court wherein it was held that the retrospective effect given by Section 51 of the Finance Act, 1982 to amendments made in Rules 9 and 49 by Notification No. 20/82-CE is valid and constitutional, but the demand is subject to the provisions of Section 11A of the Central Excises and Salt Act. It is said that after the dismissal of the said writ petition by the Hon'ble Supreme Court on 30.10.1987 the department has moved a Miscellaneous Application for realisation of Bank Guarantee which was furnished by the appellants in pursuance of the said stay order passed by the Hon'ble Supreme Court on 12.8.1981. In these premises it was argued by Shri Rav .....

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..... ed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid period of six months. 84. The said provision in the Explanation incorporates a well-known principle of law and is intended to prevent the accrual of any injury to the person who was interdicted by any injunction or stay order passed by the Court from exercising a right of suitor of any proceedings according to law. Sub-section (1) of Section 15 of the Limitation Act, 1963 also incorporates the same principle and provides that In computing the period of limitation for any suit or application for the execution of a decree, the institution or execution of which has been stayed by injunction or order, the time of the continuance of the injunction or order, the day on which it was issued or made, and the day on which it was withdrawn, shall be excluded. In Narayan Patil v. Puttabai AIR 1945 PC 5 it was held that the question whether in a particular case a party has been restrained by an injunction or order from instituting a suit must always depend for its decision upon the order, or the decree, made in the case . The Supreme Court had also an occasion to deal with such a situation wh .....

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..... of the subsequent suit would be inconsistent with the spirit or substance of the order passed in the previous litigation. It is true that rules of limitation are to some extent arbitrary and may frequently lead to hardship - but there can be no doubt that, in construing provisions of limitation equitable considerations are immaterial and irrelevant, and in applying them effect must be given to the strict grammatical meaning of the words used by them : Nagendra Nath Dey v. Suresh Chandra Dev 34 Bom. LR 1065 :: AIR 1932 PC 165. 86. However, in a recent judgment in the case of Anandilal v. Ram Narain the Supreme Court while interpreting Sec. ' 15m of the Limitation Act, 1963 held that it is true that in construing statutes of limitation considerations of hardship and anomaly are out of place Nevertheless, it is permissible to adopt a beneficent construction of a rule of limit action if alternative constructions are possible. In that case while resolving the controversy as to whether a partial stay is within the meaning of Section 15(1) of the Limitation Act, 1963 their Lordships held that- 10. We feel that there is no justification for placing a rigid construction on .....

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..... duced for ready reference and proper appreciation of the controversy in hand in extenso- SHEWETH:- 1. The Petitioner has filed the accompanying writ petition, inter alia challenging the legality of the respondents action in purporting to' collect duty of excise in respect of cotton yarn and man made yarn further processed within the Petitioner's composite mill in the manufacture of cotton fabrics and man made fabrics respectively It is the petitioner's contention that since there is no removal of the said yarn within the meaning of Rules 9 and 49 of the Central Excise Rules no duty of excise can be levied and collected in respect thereof. 2. This Hon'ble Court had, in the Petitioner's own case being Civil Writ Petition No. 664 of 1979 by Judgment dated 16th October, 1980 held that no duty was payable in respect of yarn which is further processed by the Petitioner within its composite, Mill in the manufacture of fabric. Inspite of the fact that the issue has been decided the Petitioner own case contrary to and in violation of the directions of this Hon'ble Court, the Respondents are now seeking to take act on against the Petitioner for levying a .....

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..... ure approval of the place of production etc. and if necessary, the premises appurtenant there to as referred to above. Powers of the Collector, under Rule 9(1), should be delegated immediately to the licensing authorities for this purpose, if not already done so. (ii) x x x (iii) x x x (iv) x x x B. 1. Under Rule 9(1), where goods are used in the factory for the manufacture of the same commodity no duty is leviable and duty becomes leviable only if the goods are used for the manufacture of any other commodity. However, in view of the expression in or outside such place occurring in Rule 9 use of the goods in manufacture of another commodity even within the place premises that have been specified in this behalf by the Central Excise Officer in terms of the powers conferred upon the said rule, will attract duty. B. 2. However, if in terms of Rule 9 the goods have been removed without payment of duty for being deposited in a store-room or other place of storage, subsequent, clearance from such store-room or place of storage, will attract duty in terms of Rule 49, even if they are to be used for the manufacture of the same commodity inside the factory. C. The .....

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..... f another commodity even within the place/premises that have been specified in this behalf by the Central Excise Officer in terms of the powers conferred under the said rule, will attract duty. In a nutshell in the said circular, the Board has directed the subordinate Excise Authorities that use of goods in manufacture of another commodity even within the place premises that have been specified in this behalf by the Central Excise Officers in terms of the powers conferred under Rule 9 of the Rules, will attract duty. 94. From the prayer made in para (a) it is clear that the appellants prayed for grant of stay (injunction) restraining the department from taking any action or proceedings pursuant to and/or on the same basis as the contents of the directive of the Board as the said circular was going to be implemented to the prejudice of the appellants and the High Court granted the same prayer by its order dated August 12,1981. It was also admitted to the appellants (and also would appear from the stay application made in the Delhi High Court as reproduced above) that the show cause notices dated 4th May, 1981 and addendum thereto dated 5th May, 1981 was issued by the Board igno .....

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..... cise has wrongly issued a circular dt. Sept. 24, 1980 purporting to interpret Rules 9 and 49 of the Central Excise Rules, 1944 and directing the subordinate Excise Authorities to levy and collect duty of excise in accordance therewith and since the said circular was being implemented to the prejudice of the appellants, they filed the said Writ Petition before the Delhi High Court, inter alia, challenging the validity of the said circular and also moved an application for interim stay praying that the department be restrained from taking any action or proceedings pursuant to and/or on the same basis as the contents of the directive of the Board and ultimately the Hon'ble High Court granted the stay dated August 12, 1981 as prayed for. Thus, there can be no doubt that the department was restrained by the said stay order dt. Aug. 12, 1981 passed by the Delhi High Court from levying and collecting of the duty on cellulosic spun yarn captively consumed which was payable in respect of yarn which is further processed by the appellants within their composite mill in the manufacture of fabrics. Incidentally it may also be stated that for this view in the matter we also find assurance fr .....

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..... allenge to the said circular dated Sept. 24, 1980 issued by the Central Board of Excise continued even before the Hon'ble Supreme Court in their aforesaid Civil Appeal No. 297/83 as would appear from paragraph 43 of the judgment delivered by the Hon'ble Supreme Court on 30.10.1987. Even assuming with the learned Counsel for the appellants that there was no express prohibition staying the service of notice, there can be no escape from the conclusion that in the presence of the facts and circumstances and the prayer made and the stay order passed thereon the department was restrained from serving the notice by necessary implication of the said stay order within the meaning of Explanation to Sub-section (1) of Section 11A of the Central Excises and Salt Act. 96. The case of Gokak Patel Volkart Ltd. v. Collr. CE, supra 1987 (11) ECR 363 cited by the learned Counsel for the appellants does not help the appellants. From the said judgment it is clear that in that case the High Court of Karnataka by its order dated 4.6.1976 only directed a stay of collection of excise duty and not levying of the duty. Since the High Court only directed stay of collection of excise duty, the Hon& .....

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..... of the case and not even relevant to the controversy in hand. In that case notices were admittedly issued after the expiry of the statutory period (i.e. to say on 31.12.1963) specified in Section 7(2) of the Assam Taxation (on Goods Carried by Road or on Inland Waterways) Act, 1961. These notices were challenged before the High Court on the ground that they were issued beyond the date of expiry of 2 years from the date when written should have been filed as specified under Section 7(2) of the said Act. In defence it was contended by the Revenue i.e. to say Supdt. of Taxes that the said Act of 1961 was passed by the legislature of Assam on 6.4.1961 with retrospective effect from 24.4.1954 and published in the gazette on 15.4.1961 and was to be operative upto 31.3.1962 and that the assessee i.e. to say O.N. Trust challenged the validity of the said Act before the High Court of Assam in writ petition and they applied for injunction restraining the Revenue from taking any proceedings under the Act and the interim orders for injunctions were passed on various dates and subsequently a common order was passed by the Court on 18.9.1961 making the interim orders absolute and restraining th .....

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..... the explanation to Sub-section (1) of Section 11A of the Central Excises and Salt Act which expressly provides that where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the period of 6 months. Under these circumstances the argument that the department should have asked for variation or modification of the said stay order dated Aug. 12, 1981 is not available to the appellants. 99. It was also contended by the learned Counsel for the appellants that it was not impossible for the department to issue the demand notice for the period from 1.4.1981 to 5.12.1981 within 6 months from the relevant date on the same lines as the department had issued demand notices on 4.5.1981 and addendum thereto on 5.5.1981 to save the limitation. He drew our attention to the demand-cum-show cause notice C. No. MOR-1I/Assessment of yarn NES/79/652 dated 4.5.1981 wherein it was stated that this Demand Notice is issued merely to comply with the time-barring provisions of Section 11A of the Act pending decision by Hon'ble Supreme Court. The demand will not be processed till finalisation of the issue by the Hon'ble Supreme Court a .....

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..... 82 notwithstanding the said interim order in terms of Section 51, ibid. Under these circumstances the question to issue any demand notice after passing of the stay order dated August 12, 1981 by the Delhi High Court as aforesaid for the period 1.4.1981 to 5.12.1981 and before the passing of the Finance Act, 1982 on the lines of show cause notice dated 4.5.1981 and its addendum dated 5.5.1981 did not arise. For, from the date of the stay order dated Aug. 12, 1981 till the passing of the Finance Act, 1982 the department could not issue any demand notice to the petitioner as the said stay order was in force and the department was entitled to exclude this period under Explanation to Sub-section (1) to Section 11-A of the Central Excises and Salt Act. On the point of clarity when the said Explanation itself gave a right to the department to exclude the period during which the interim stay remains operative in computing the period of 6 months there was no obligation on the department to issue nor it was necessary for it to issue such conditional show cause notice on the lines of show cause notices dated 4.5.1981 and addendum dated 5.5.1981 thereto. 100. Thus, we hold that the show cau .....

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..... sufficient security in such amount, or under such conditions as the proper officer deems fit, binding himself for payment of the difference between the amount of duty as provisionally assessed and as finally assessed. (2)* * * (3) The Collector may permit the assessee to enter into a general bond the proper form with such surety or sufficient security in such amount or under such conditions as the Collector approves for assessment of any goods provisionally from time to time : Provided that, in the event of death, insolvency or insufficiency of the surety or where the amount of the bond is inadequate, the Collector may in his discretion demand a fresh bond and may, if the security furnished for a bond is not adequate, demand additional security. (4) The goods provisionally assessed under Sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are not so assessed. (5) When the duty leviable on the goods is accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty, finally assessed and if the duty provisionally assessed falls short of, or is in excess of, the dut .....

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..... 1985 also cannot make the earlier assessment provisional. It is common knowledge that the assessments have to acquire the character of provisionality before the goods are removed on payment of duty provisionally assessed on an order of the proper officer directing the provisional assessment. A post facto endorsement that too after a long lapse of time does not make and cannot make past assessment provisional. To accept the contention of the learned Jt. CDR would be to non est the provisions of Rule 9-B of the Central Excise Rules, 1944, which is not permissible. The cases cited by the learned Jt. CDR are also not apt to be controversy in hand nor in any way support the contention of the learned It CDR The case of Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Limited, 1978 ELT (J. 416) : ECR C 398 relates to Rule 10A of the Central Excise Rules which do not exist at the relevant time in question and the ratio of the said judgment is not applicable. Likewise the case of DR. Kohli v. Krishna Silicate and Glass Works and Ors., 1983 ELT 216 which deals with the scops of erstwhile Rule 10A is also not relevant. This judgment was rendered in the peculiar .....

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..... nstant case there is no such endorsement on the RT-12 Returns - a fact which was admitted by Shri Naik. the learned Jt. CDR during the course of hearing after perusing the RT-12 Returns. 104. A farfetched argument was also advanced by Shri Naik, the learned Jt. CDR that the endorsement made on the RT-12 Returns in the instant case as aforesaid should be construed as protective assessment and cited the following case law- (i) P .K. Trading Co. v. Income Tax Officer (ii) Commissioner of Income Tax v. Cochin Co. (P) Ltd., (iii) Mahamaya Dassi v. Commissioner of Income Tax, 105. On a closer study of the aforesaid decisions it is clear that under the Income Tax laws where the identity of the assessee in respect of particular income is in doubt a concept of protective assessment gains currency which the judicial system recognised . In the instant case under the Central Excises and Salt Act and the Rules made thereunder no question of protective assessment can arise for, Rule 9-B of the Central Excise Rules, 1944 expressly makes provisions for the provisional assessment and provides the circumstances when a provisional assessment can be made and also how it .....

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..... sed by the Hon'ble Supreme Court on 30.10.1987 (since reported in) the plea that the demand made in the show cause notice dated 5.6.1982 so far as relates to the period from 1.4.981 to 5.12.1981-which was admittedly issued before the said stay order passed by the Hon'ble Supreme Court on 15.3.1983 is not available to the appellants. To support his contention he submitted that Mis. Bhilwara Processors Ltd., and Ors . also filed their Writ Petition No. 848 of 1984 against the Union of India in the Hon'ble Supreme Court challenging the levy of duty and in that Writ Petition an interim order was passed on 20.2.1984 restraining the department from levying and recovering the disputed portion of the duty of excise on the condition that the petitioners of that case shall furnish Bank Guarantee The Bank Guarantee so ordered was furnished. Ultimately the said writ petition was dismissed by the Hon'ble Supreme Court on 4.11.1988 along with other connected writ petition No. 12183/85 filed by the Ujagar Prints Thereafter the department asked the petitioners of that case to pay the full duty otherwise the department will take the steps to enforce the Bank Guarantee. Aggrie .....

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..... d before the Supreme Court and we enter into no controversy and can hardly enter into this question but it cannot be disputed that the grounds were taken before the Supreme Court in miscellaneous petition and the miscellaneous petition was dismissed. Be that as it may, we are of the opinion that once under orders of a Court, stay order is sought in respect of recovery of excise duty or any other duty for that matter and the stay order is conditional on furnishing a bank guarantee, if ultimately the writ petition is dismissed and the stay order is vacated, the bank guarantee can become encashable immediately. Therefore, we need not go into this question as to whether Section 11-A is or is not attracted, we are of the opinion that because the petitioner, furnished the bank guarantee, secured a stay order which was conditional as a result of which levy and recovery was stayed once the writ petition has been dismissed and the stay order has been dismissed and the stay order has been vacated, the bank guarantee has become encashable, neither it will be proper nor equitable for this Court to say or make an order that the bank guarantee should not be encashed. The Supreme Court alone can .....

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..... 111. In this appeal also it was contended by the learned Counsel for the appellants that since the demand relating to the period prior to 6.12.1981 was time barred (which we have rejected as aforesaid) the appropriation of ₹ 1,63,22,515.70 against the payment of ₹ 2,63,40,104.92 was illegal and ought to be refunded for appropriation towards the demand for the period from 20.2.1982 to 15.3.1983 as set out in appellant's letter dated 11.12.1987. I have considered this contention while dealing with Appeal No. E/2355/88-D and rejected the same for the reasons recorded therein. (In Appeal No. E/2355/88-D). 112. In the result this appeal is also dismissed. Appeal No. E/2355/88-D 113. I regret that I am unable to agree with the reasonings and findings recorded by the Hon'ble Sr. V.P. in the facts and circumstances of the instant case and record my judgment as under. 114. It was contended by Shri Ravinder Narain that in case his contention in other appeals that Show Cause Notices dated 4.5.1981 and addenda thereto dated 5.5.1981 do not lapse with the issuance of the Show Cause Notice dated 5.6.1982 and further that a part of the demand for the period fro .....

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..... o the debtor, and, in the second, to the creditor. 117. In our country, the said rule has been codified in the Indian Contract Act, 1872 and finds expression in Sections 59 to 61 under the heading Appropriation of Payments . The said Sections read as follows- 59. Application of payment where debt to be discharged is indicated.-Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying that the payment is to be applied to (he discharge of some particular debt, the payment, if accepted, must be applied accordingly. 60. Application of payment where debt to be discharged is not indicated.-Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits. 61. Application of payment where neither party appropriates.- Where neither party makes any appropriation the payment shall be applied in dischar .....

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..... hich may be applicable to a given case. 119. In the present case we are concerned with the recovery of sums due to Government under the Central Excises and Salt Act, 1944. Section 11 of the Act provides for 'recovery of duty' as well as 'any other sums of any kind payable to the Central Government under any of the provisions of the Act or of the rules made thereunder' and runs as follows- 11. Recovery of sums due to Government.-In respect of duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or of rules made thereunder the officer empowered by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (L1V of 1963) to levy such duty or require the payment of such sums may deduct the amount so payable from any money owing to the person from whom such sums may be recoverable or due which may be in his hands or under his disposal or control, or may recover the amount by attachment and sale of excisable goods belonging to such person and if the amount payable is not so recovered, he may prepare a certificate signed by him specifying the amount due from the person lia .....

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..... ntee within the said period. The appellants accordingly paid the 50 per cent of the past dues (duty) within the said period. The said Civil Appeal filed by the appellants were dismissed by the Hon'ble Supreme Court on 30.10.1987 [since reported in] After the said dismissal of the appeals the said 3 show cause notices were adjudicated upon by the adjudicating authority vide his Order-in-original No. 19/87 dt. 29.12.1987. In his adjudication order the Assistant Collector while confirming the said 3 demands made in the aforesaid show cause notices amounting to ₹ 94,87,872.20 ordered that since the appellants have already paid an amount of ₹ 45,17,899.65 (obviously paid in compliance with the stay order granted by the Hon'ble Court on 15.3.1983 as reported by the appellants in their letter dt. 22.6.1983 and 11.12.1987), the appellants, therefore, should deposit the balance of the adjudged amount i.e. to say ₹ 49,69,972.55 within 10 days of the receipt of this order. The said adjudication order was confirmed by the Collector, which is impugned and is the subject matter of Appeal No. E/2355/88-D. 123. Likewise during the pendency of the aforesaid Writ Petit .....

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..... e appellants during the hearing. The main grievance of the appellants was that they have paid the said amount which the adjudicating authority had arbitrarily and illegally adjusted against the other demands relating to the period from 6.11.1980 to 19.2.1982 as can be seen from the aforesaid Order-in-Original No. 19/Demands/87 and 21/Demands/87. 126. Countering the arguments Shri Naik, the learned Jt. CDR submitted that the duty paid by the appellants in terms of the stay order dated 15.3.1983 granted by the Hon'ble Supreme Court was lying in the hands of the department and under Section 11 of the Central Excises and Salt Act, 1944 as reproduced above, the Assistant Collector was well within his right to adjust the same against the amount of duty confirmed under the said 2 adjudication orders. 127. We have considered the submissions and find that neither under the Common Law nor under Section 11 of the Central Excises and Salt Act 1944 the contention of the appellants can be accepted. 128. The following facts are admitted to the parties- (i) That on 15.3.1983 when the stay order was passed by the Hon'ble SC, the Central Excise duty amounting ₹ 5,21,50,492 .....

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..... lied but it is clear from the wordings of this section that such intimation should synchronise with the payment as an intimation made after the creditor has demanded the dues is not an intimation of the nature contemplated by the section. If the debtor had omitted to intimate and there are no other circumstances indicating to which the debt is to be applied, the creditor has a right to apply it at his discretion to any lawful debt actually due and payable to him from the debtor irrespective of the fact whether its recovery is or is not barred by the law in force for the time being (See Section 60). Section 61 of the Contract Act further provides that where neither party makes any appropriation the payment shall be applied in discharge of the debts in order of time, whether they are or not barred by the limitation. In the instant case it is not in dispute that excise duty amounting to ₹ 5,21,50,492.82 for the period from 6.11.1980 to 15.3.1983 was due to the appellants at the time when the stay order was granted by the Hon'ble Supreme Court on 15.3.1983. It is also not in dispute that in respect of the said past dues the appellants were directed by the said stay order to p .....

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..... s it may, the fact remains that the Supreme Court ordered the petitioners to pay 50 per cent of the past dues in cash to the department and for the balance to furnish a Bank Guarantee and the appellants did pay the 50 per cent of the past dues in cash without intimating to the department that it should not be applied to the duty demanded for the period from 6.11.1980 to 5.12.1981. It is also significant to note that after the dismissal of the Civil Appeals by the Supreme Court on 30.10.1987 the department asked the appellants to submit their reply to the aforesaid show cause notices asking them to pay the duty from 6.11.1980 onwards, and the appellants in their reply dated 11.12.1987 only intimated to the department that out of the said demand duty amounting to ₹ 2,58,10,387.57 relating to the period from 6.11.1980 to 5.12.1981 is time-barred and the duty for the rest of the period i.e. to say from 6.12.1981 to 15.3.1983 amounting to ₹ 2,63,40,104.92 is within time and since they have already paid a sum of ₹ 2.61,51,000.00 as per stay order of the Hon'ble Supreme Court dated 15.3.1983 and the remaining unpaid amount of ₹ 1,89,104.92 on 8.12.1987 the dema .....

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..... s due to Government, we find that the Assistant Collector rightly deducted the amount of duty which he confirmed in his said adjudication orders under the Central Excises Salt Act, 1944. 132. Section 11 of the Central Excises and Salt Act as extracted above provides for recovery of sums due to Government. The scope of this section is very wide. Apart from the other modes of the recovery, one of the methods of recovery of sums due to the Government provided under Section 11 is that the officer concerned may deduct the amount so payable from any money owing to the person from whom such sums may be recoverable or due which may be in his hands or under his disposal or control. In other words it empowers the concerned officer to deduct the amount of duty from any money owing to the person from whom such duty is recoverable or due which may be in his hands or under his disposal or control. Thus, assuming that the duty paid for the period from 6.11.1980 to 15.3.1983 in terms of the stay order could not be appropriated or adjusted by the department till the finalisation of the demand after the dismissal of the Civil Appeals filed by the appellants on 30.10.1987, the Assistant Collecto .....

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..... ent of Karnataka High Court in the case of Davangere Cotton Mills 1986(7) ECR 137 holding pre-amended Rules 9 and 49 as allowing law of duty on goods used for captive consumption, cannot have the effect of overriding the specific judgement of Delhi High Court in the case of the appellants for the simple reason that judgement of one High Court cannot overrule the judgement of another High Court. Nevertheless, the notices dated 4.5.1981 and addendum thereto dated 5.5.1981 are well within tine by sheer' arithmetical calculation as mentioned by the learned Sr. Vice President and the amendment of Rules 9 and 49 by notification No. 20/82 dated 20th Feb. 1982 having been given retrospective and validating effect since the inception of the Central Excise Rules, 1944. The amended rules would be deemed to have the same effect during the period 6.11.1980 to 31.3.1981 to which the notice dated 4.5.1981 and addendum thereto dated 5.5.1981 pertains. Hence I dismiss the appeal No. E/2353/88-D. A.No.E/2354/88-D 139. I have carefully gone through the judgements of my two learned brothers with respect to this appeal. I regret respectfully that I am unable to persuade myself to agree with .....

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..... be noticed that the emphasis is on granting the stay from payment of duty on the yarn and not serving show cause notice or determining the amount of duty on such yarn. 141.3 Second part of the prayer is to restrain the respondents from taking any action or proceedings pursuant to and on the basis of the Board's directive dated 24.9.1980 (reproduced supra in para 90). Alternative prayer built in this part is to restrain the respondents from taking any action or proceedings pursuant to or on the same basis as the contents of the Board's directive dated 24th Sept. 1980. The Board's directive dated 24th September, 1980 envisages approval or specification of the place or premises of production so that steps could be taken by the Collectors to attract duty on goods captively consumed in the place of production or premises so specified and approved. In short, the purport of the second part of the prayer is to restrain the respondents from levying and collecting duty in pursuance of the Board's directive by directly invoking 'it or on the basis of the reasons given in the said directive. 141.4 Third and last part of the prayer was for restraining the department to .....

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..... .1980 could be by seeking an appropriate stay from the Supreme Court. No material has been brought on record as to what efforts have been made by the department in getting stay of operation of Delhi High Court's said judgement. It is admitted that the department's S.L.P. in that regard is yet to be admitted. 144. In view of the aforesaid analysis of the in term stay order dated 12.8.1981 of Delhi High Court it cannot be taken as an order barring he department from serving show cause notice. On most aspects, it was a stay order against collection of duty on yarn and therefore, the ratio of Supreme Court's judgement in the case of Gokak Patel Volkart Ltd. v. CCE Belgaum would directly apply. If the department has failed to serve the show cause notice within time in terms of Section 11A it cannot take shelter behind the interim stay order dated 12.8.1981. Accordingly, the demand of duty in show cause notice dated 5.6.1982 for the period beyond the period of six months from the relevant date would stand barred by the provisions of Section 11-A. 145. From the following citations- (i) AIR 1945 PC 5 ( Narayan Patil v. Puttabai ) (ii) ( Siraj-ul-Haq V.S.L. Boar .....

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..... e yarns manufactured by them and utilised by them for captive consumption for manufacture of fabric, implication that it restrained the department from serving a show cause notice cannot necessarily be read into it. Scope of the terms 'levy' and 'collection has been spelt out by the Supreme Court in the case of Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd. 1978 ELT J 416 : ECR C 398 in para 20 reproduced below:- 20. The term 'levy' appears to us to be wider in its import than the term 'imposition' is generally used for the levy of a tax or duty by legislative provisions indicating the subject matter of the tax and the rates at which it has to be taxed. The term 'assessment' on the other hand, is generally used in the country for the actual procedure adopted in fixing the liability to pay a tax on account of particular goods or property or whatever may be the subject of the tax in a particular case and determining its amount. The Division Bench appeared to equate 'levy' with an 'assessment' as well as with the collection of a tax when it held that when the payment of tax is enforced, the .....

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..... 9 of the report SC mentioned supra. It is only when the amount of duty has been determined in terms of Section 11-A(2) that it can be said that the department has levied or assessed the duty. The interim stay order dt. 12.8.1981, therefore, restrains the department from undertaking the exercise spelt out in Section 11-A(2). It does not restrain the department from serving the show cause notice spelt in Section 11-A(1). Service of the show cause notice is a stage prior to determination of levy after considering the representation of the assessee. Explanation to Section 11-A(1) enables the department to exclude the time during which any interim order or injunction operated for service of the show cause notice and not for levying or determining the amount of duty. It is the first stage in the three stage process of levy and collection of duty that has to be restrained by an injunction of a Court before the period can be excluded in computing the period under Section 11-A. Restraint on any subsequent stage by an injunction order cannot be availed of by the department in computing the period of six months referred to in Section 11-A. This becomes clear from the Supreme Court's judge .....

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..... time barred for the period beyond the period of six months from the relevant date in terms of Section 11-A. 149. I am also inclined to agree with another plea of the appellants' learned Counsel that in case there was any doubt about the effect of the interim order dated 12.8.1981 the department could always ask for variation of it. This plea of the learned advocate is based on Supreme court a judgement in the case of Supdt. of Taxes Dhubri v. O.N Trust . If the matter has got time barred either due to the department's town interpretation of the interim order or due to its own laches fault 'cannot be laid at the nature of the interim order. It could not fake advantage of its own wrong or lack of diligence as observed by the Hon'ble Supreme Court in that case. There is no provision for waiving the statutory period of issuing the show cause notices under Section 11-A and if any notice is barred because of this statutory provision it has to be held so. 150. Relevant date for computing the period of six months under Section 11-A in terms of Sub-section (3)(ii)(A) is the date on which a monthly return is filed; it is on record that monthly returns for yarn manuf .....

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