TMI Blog2007 (8) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation (Pvt.) Limited. The other writ petitions are filed by different petitioners. But, since the issues involved in all the writ petitions are identical all these writ petitions have been heard together and are being disposed of by this common order. 2. Madurai Power Corporation (Pvt.) Ltd., i.e., petitioner in W.P. No. 45294 of 2002 is engaged in generation of electricity through its generating station situated at Paravai Village, Madurai. The company requires Low sulphur Heavy Stock (LSHS) for using the same as the primary fuel in the generation of electricity. Notification No. 3/2001 came to be issued under Section 5-A(1) of the Central Excise Act, 1944 whereby Low Sulphur Heavy Stock (LSHS) and Furnace Oil (FO) were exempted from excise duty for the use of power generation by the electricity undertakings owned by or controlled by the Central Government, or any State Government or any State Electricity Board or any Local Authority or a person licensed under Part II of Indian Electricity Act, 1910, to supply electrical energy or a person who has obtained sanction under Section 28 of Indian Electricity Act, 1910, to engage in the business of supplying electrical energy, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any filed reply to the said notice, and the said proceedings remain pending in the files of the respondent. The Deputy Commissioner of Central Excise issued yet another show cause notice dated nil (received on 2-12-2002) calling upon the petitioner to show cause as to why the excise duty amounting to Rs. 20,80,69,750/- (Rupees twenty crores eighty lakhs sixty-nine thousand and seven hundred fifty only) payable on the LSHS procured by the petitioner, as detailed in Annexure-B to show cause notice, should not be demanded from the petitioner-company under the provision to sub-section (1) of Section 11-A of the Central Excise Act, 1944 for the period from July 2001 to August 2002. The legality and propriety of the show cause notice is questioned by the petitioner-company in the present writ petition on the ground that the same is arbitrary, illegal and wholly without jurisdiction. It is also alleged by the petitioner that the notice has been issued in mala fide exercise of power only with a purpose of meeting the revenue target on the basis of totally absurd view of the legal position especially when no decision has been taken on the earlier show cause notices issued to the petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IPPs is governed by the Central Government Notification. The Ministry of Power, Government of India, accordingly issued Notification dated 30-3-1992 stipulating various terms which would govern the PPA to be entered into between power generating companies and the State Electricity Boards. The PPAs entered into between the petitioners and the Tamil Nadu State Electricity Board are as per the terms of the said Notification dated 30-3-1992 and the entire electricity generated by the petitioners is to be supplied to the Tamil Nadu State Electricity Board (for short TNSEB). 6. The case of the petitioners is that the generation of electricity by the petitioner companies is fully controlled by the TNSEB, inasmuch as the petitioner companies cannot generate electricity, except in terms of the PPAs and in terms of Section 18 of the Electricity Supply Act, 1948, the statutory control regarding operations of generating stations vests with the respective state Electricity Boards. Even the location of the petitioner-companies is stipulated by the TNSEB. The projects of the petitioner-companies have been approved by the TNSEB and in terms of the PPAs, the Government of Tamil Nadu has guarant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 3/2001 dated 1-3-2001, as provided under Section 11A of Central Excise Act, 1944 and in consonance with the principles of natural justice, the petitioners were issued with relevant notices to snow cause as to why the Registration Certificates issued to them under the Rules should not be cancelled. The petitioner-companies are not "deemed licensees" by virtue of Section 26-A of the Electricity Supply Act, 1948. On the other hand, a careful reading of the said section would disclose that the petitioner-companies are exempted from obtaining licence from the authority appointed under Indian Electricity Act, 1910 by virtue of having drawn the authority directly from another Act of the Parliament namely Electricity Supply Act, 1948. Therefore, it cannot be contended that the petitioner-companies are "deemed licensees" under the State Electricity Board. It is, further, contended that the petitioner-companies are not owned by the Central Government/State Government/Local Authority/State Electricity Board. The petitioners are private limited companies. Neither the Central Government/State Government nor any Local Authority or Tamil Nadu State Electricity Board has any shareholding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the respondents submitted that the impugned show cause notices are perfectly in conformity with the provisions of Section 11A of the Central Excise Act and there is no illegality in the issue of such show cause notices and there is no need to refer to Section 35E(2) of the said Act. He submitted that after the amendment to Section 11A which was necessitated on account of the judgment of the Constitution Bench in Collector of Central Excise, Baroda v. Cotspun Limited, 1999 (113) E.L.T. 353 (S.C.) = 1999 (7) SCC 633 the power has been given to the authorities to issue show cause notices, despite the fact that non-levy or non-payment or short levy was on the basis of any approval, acceptance or assessment obviating the need to have the earlier order set aside before issuing the show cause notices. Therefore, the terms of Section 11A as it now stands, will be a complete answer to the petitioners, objection and the validity of Section 11A has not been questioned. He submitted that even otherwise Section 11A and Section 35E(2) are two separate fields and are intended for different purposes. The object of Section 11A is to enable recovery of dues for the period during which, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department to invoke Section 11A. The amendment of Section 11A does not contain an non obstante clause nor the amended Section 11A override or nullify Section 35E. Section 35E has to be read harmoniously with Section 11A. If there is no case of approval, acceptance or assessment, the Central Excise Officer can straightaway invoke Section 11A and demand duty for one year/five years, as the case may be. Section 11A does not override Section 35E and both sections have to co-exist and read harmoniously. It is only where short-levy, short payment, non-levy or non-payment occurs either on account of the approvals relating to rate of duty or valuation, demands can be sustained under Section 11A itself without having recourse to Section 35E. So far as 2001 Rules are concerned, recovery can be made if there is misuse of goods and does not concern with the person who has purchased the goods. 12. In Collector of Central Excise, Baroda v. Cotspun Limited (supra), the Constitution Bench of the Supreme Court held as follows :- "The levy of excise duty on the basis of an approved classification list is the correct levy, at least until such time as to the correctness of the approval is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notices issued under the said section for non-recovery or short-recovery or erroneous refund of duties for a period of six months or five years in certain situations will prevail notwithstanding any approval, acceptance or assessment of duty under the provisions of the Central Excise Rules. The clause also seeks to validate actions taken in the past on this basis in conformity with the legislative intention. This amendment has become necessary to overcome certain judicial pronouncements." 15. Further, Section 110 of the Finance Act validating actions taken under Section 11A provides as under : "110. (1) Any notice issued or served on any person under the provisions of Section 11-A of the Central Excise Act during the period commencing on and from the 17th day of November, 1980 and ending on the date on which the Finance Act, 2000 receives the assent of the President (hereinafter referred to as the said period) demanding duty on account of non-payment, short payment, non-levy, short-levy or erroneous refund within a period of six months or five years, as the case may be, from the relevant date as de fined in clause (ii) of sub-section (3) of that section shall be deemed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not deal with classification list or relate to reopening of the approved classification list. According to the Constitution Bench, the same is exclusively provided by Rule 173B. 49. Section 11A deals with a case when inter alia excise duty has been levided or has been, short-levied or short-paid. The word "such" occuring after the word "whether or not" refers to non-levy, non-payment, short-levy or short-payment or erroneous refund. It is, therefore, not correct to contend that the word "such" indicates only such short-levy which has been held to be non-existent in Cotspun having regard to Rule 173B. Such short-levy or non-levy may be on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods. Thus, any approval made in terms of Rule 10, in the event, any mistake therein is detected, would also come within the purview of the expression "such short-levy or short-payment". Such notice is to be served on the person chargeable with the duty which inter alia has been short-levy or short-paid. 51. The procedure laid down under Rule 173B of the Rules has specifically been included in the Act. Furthermore, by reason of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision or order and may by order, direct such authority to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner of Central Excise in his order. The question is whether the amending Section 11A has superseded the mechanism provided under Section 35E giving power to the Competent Authority to reopen the case. After amendment, recovery can be made even if there is non-levy, non-payment or short-levy or short-payment or erroneous refund on the basis of any approval, acceptance or assessment. The basic period is increased from six months to one year and the larger period continues to be five years for fraud, suppression, wilful misstatement etc. The intention of the Legislature was that recovery can be enforced for a period of one year or 5 years as the case may be notwithstanding any approval, acceptance or assessment of duty under the provisions by the Assessing Officer. It is well settled that the statute has to be read as a whole to find out the real intention of the Legislature. In Sultana Begum v. Prem Chand [1977 (1) SCC 373] two Judge Bench of the Supreme Court held as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal that order stands. So long as the order of assessment stands the duty would be payable as per that order of assessment. A refund claim is not an appeal proceeding The officer considering the refund claim cannot sin in appeal over an assessment made by a competent officer. The officer considering the refund claim cannot also review an assessment order. 21. In Asian Paints (India) v. Collector of Central Excise, Bombay [2002 (142) E.L.T. 522 (S.C.) = 2002 (9) SCC 515] the Supreme Court has observed that Sections 35E and 11A operate in two different fields and are invoked for different purposes. Different time limits are, therefore, set out therein. Therefore, the Court rejected the contention that recovery of excise duty cannot be made pursuant to an appeal filed after invoking the provisions of Section 35E, if the time limit provided in Section 11A has expired. It was observed that to so read the provisions, would be to render Section 35E virtually ineffective, which would be impermissible. 22. In Commercial Taxation Officer v. Rajasthan Taxchem [2007 (209) E.L.T. 165 (S.C.) = 2007 (2) SCALE 120], the respondent was engaged in the business of manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Section 35E. Section 11A does not indicate that the legislature intended to override Section 35E. Both sections have to be read harmoniously. In the present case, Annexure-I certificate has been issued in favour of the petitioners from time to time on executing B-8 security bond and on furnishing a bank guarantee. The department has to follow the procedure under Section 35E for setting aside the Annexure-I certificate. Unless, the Annexure-I certificate is cancelled or rejected by the competent authority, by following the procedure under Section 35E, it is not permissible for the respondents to invoke Section 11A of the Act. Therefore, we are of the considered opinion that the issuance of show cause notices are without jurisdiction and is liable to be struck down. 24. As regards, the issue of limitation, the question is whether the benefit of longer period of limitation under the proviso to Section 11A is available to the Department. In order to avail the benefit of longer period of limitation, the department has to establish wilful suppression of fact. Proviso to Section 11A reads as under :- "Provided that where any duty of excise has not been levied or paid or has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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