TMI Blog2023 (5) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment are to be made provisional and directing them to execute bond etc as required under law. In view of the observations made by the larger bench of tribunal the demands for duty or refunds can be effected only after finalization of the assessment. Thus the show cause notice dated 07.10.1988 was pre-mature and demand made under Section 11A in terms of the said show cause notice is pre-mature. Appellants as observed by the impugned order do not dispute that differential duty is payable by them hence we do not go into the issues relating to the demand/ quantification of duty paid by the appellant even under protest. The show cause notice issued without finalization of the assessment is pre-mature, so the demand made in terms of Section 11A of the Central Excise Act,1944 cannot be sustained and the amounts should have been recovered from the appellants by finalization of the provisional assessment. Thus the authorities are directed to finalize the provisional assessments at the earliest and appropriate the amounts as required from the amounts deposited by the appellant under protest in these proceedings. Interest and penalties - HELD THAT:- As the demands made under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm the demand of Rs 20,84,955.72 (Rupees Twenty Lakh Eighty Four Thousand Nine Hundred and Fifty Five and Seventy Two Paise only) short paid as above under Section 11A (2) of Central Excise Act, 1944 (now sect 11A (10) of Central Excise Act, 1944) (b) I impose a penalty of Rs 20,84,960/ (Rupees Twenty Lakh Eighty Four Thousand Nine Hundred and Sixty only) on M/s Godrej Soap Private Ltd under Rule 173 Q (1) (a) of the Central Excise Rules, 1944 (c) I order the recovery of the interest at the rate applicable under the provision of Section 11AB of the Central Excise Act, 1944 (now Section 11AA of the Central Excise Act, 1944) on the demand confirmed at (a) above from 28.09.1996 till payment of said demand. 2.1 Appellant is engaged in the manufacture of Liquid Hair Dye , during the period from September 1982 to March 1985. 2.2 They filed classification list classifying the liquid hair dye under Tariff Item 68, which was approved. However, vide Show Cause Notice dated 13.7.1982, the department proposed to reclassify the Liquid Hair Dye under Tariff Item 14F. The last paragraph of the SCN dated 13.7.1992 states that pending the decision in the matter, the classificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard Shri Rajesh Ostwal with Ms. Payal Nahar, Advocates for the appellant and Shri P K Acharya, Superintendent, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits: The assessment for the period September 1982 to March 1985 was provisional under Rule 9B of the erstwhile Central Excise Rules, 1944. The provisional assessment was not finalized till 17.10.1988. Therefore, the show cause notice issued prior to the date of finalization of provisional assessment by the Department, is pre-mature and hence, bad in law. It is well settled that the show cause notice under Section 11A of Central Excises Act, 1944 is not to be issued when assessment is provisional. Therefore, the present proceeding is bad in law. Indian Telephone Indus. Ltd. [2006 (201) ELT 177 (T)] Serene Industries Ltd. [2000 (123) ELT 909 (T)] M.R.F. Ltd. [2004 (169) ELT 125 (T)] Once it is held that the demand of differential duty cannot be confirmed under Section 11A of the Central Excise Act. 1944. Section 11AA or 11AB of the Central Excise Act. 1944 cannot be invoked. Elgitread (India) Ltd. [2001 (133) ELT 172 (T)] Kitply Industries L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.6.2001 clarified that Rule 7 relating to provisional assessment and for charging of interest, will apply to cases in which provisional assessment is resorted to on or after 1.7.2001 and not to past cases of provisional assessment even if the assessments are finalized on or after 1.7.2001. The impugned Order relies on the decision of Hon'ble Bombay High Court dated 17.9.2002 reported at 2003 (161) ELT 68 (Bom.) to hold that the excise duty demand is maintainable in the present case applying the principles analogous to Section 11D of the Central Excise Act, 1944 and interest under Section 11DD. In this regard, it is submitted that the HC Order dated 17.9.2002 has been set aside by the Hon'ble Supreme Court vide Order dated 9.7.2008 reported at 2008 (228) ELT 321 (SC). This has also been accepted by the Hon'ble High Court vide Order dated 15.9.2014 while setting aside the Stay Order dated 7.10.2013 passed by the Hon'ble CESTAT in this very case. Therefore, reliance placed on the HC Order dated 17.9.2002 for upholding demand under Section 11D along with interest under Section 11DD, is incorrect and not maintainable. Further, the principles analogous to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Two Paise only)Superintendent acknowledging the letter dated 8.9.1982 submitted by the appellants. The show cause notice sought to invoke proviso to Section 11A of the Central Excise Act, 1944 however the Additional Commissioner has referred only Section 11A of the Central Excise Act, 1944 while confirming the demand raised in the show cause notice. Further, vide their letter dated 8.9.1982 the appellants informed the department about the manner in which the value of the 'liquid hair dye' will be determined by them. The appellants specifically informed that they would consider the abatement of excise duty of 105% for the purpose of arriving at the assessable value on which duty is payable under Tariff Item 68. Therefore, under such circumstances, there cannot be any suppression of facts on the part of the appellants. Therefore, the demand beyond normal period of limitation of six months is not maintainable. The show cause notice is dated 17.10.1988 proposed demand for the period from September 1982 to March 1985. Part of the demand is even beyond the extended period of 5 years. The demand beyond 5 years period is not at all maintainable. Once assessment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter, the goods shall be provisionally assessed under T.I.68 of CER under Rule 9B of the Central Excise Rules, 1944.The appellants had also filed price lists and classification lists under T.I.14F under protest and had requested for provisional assessment of the goods under their pre-existing B-13 bond. Thus, the provisional assessments continued from September, 1982 to March, 1985.Rule 9B of the Central Excise Rules, 1944 which governed the provisional assessment during the relevant period was as follows:- Rule 9B. Provisional assessment to duty. - (1) Notwithstanding anything contained in these rules: (a) where the proper officer is satisfied that an assessee is unable to produce any document or furnish any information necessary for the assessment of duty on any excisable goods; or (b) where the proper officer deems it necessary to subject the excisable goods to any chemical or any other test for the purpose of assessment of duty thereon; or (c) where an assessee has produced all the necessary documents and furnished full information for the assessment of duty, but the proper officer deems it necessary to make further inquiry (including the inquiry t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference to value, such value shall, subject to the other provisions of this section, be deemed to be - (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: Provided that- (i) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers; (ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso, the price or the maximum price, as the case may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee. Explanation. - - In this sub-clause, packing means the wrapper, container, bobbin, pirn, spool, reel and warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound; (ii) does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods and, subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale; In view of the Explanation to (ii) to Section 4(4) (d) the appellants were eligible to deduct the duty payable by them under T.I.68 and in fact paid in terms of the provisional assessment. However, instead of deducting the duty actually paid (and payable in terms of the provisional assessment) they deducted the duty @ 105% from the wholesale selling price. The rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bay High Court reported as Godrej Industries Ltd., v/s. ACC-2003 (161) E.L.T. 68 (Bom.). It was held by the Hon'ble Court that:- 36. In the above backdrop, can it be said that the act of claiming deductions @ 105% while calculating assessable value of the goods was an innocent act on the part of the petitioner. The answer is certainly No . Can it be said to be a mistaken deduction on the part of the petitioner? Again, answer is No . The petitioner was very much conscious and aware of the possible liability of excise duty in the event of dismissal of the petition. Thus, two alternative ways were open to the petitioner to cover or insure itself from the possible liability of excise duty in the event of dismissal of this petition; one was to increase the selling price of their product and another was to calculate the component of excise duty which was @ 105% and shift this burden on the customer and recover the same from them. It is an admitted fact that while calculating assessable value the petitioner claimed deduction @105% instead of claiming deduction of only @ 8% on account of excise duty. Had it been a deduction @ 8% instead of @ 8%, then the assessable value would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46) E.L.T. 23 (Bom.) = 1990 (1) B.C.R. 515. The Full Bench observed that the conduct of the petitioner in a case lie the present one is very much relevant. The Court observed in that matter as follows :- But it is not possible to hold that in determining a claim for refund, the writ court cannot at all enter into the question who had actually borne the burden of the said tax whether the person from whom the tax was collected had himself borne it or had passed on the burden to others. But it can never be accepted that unless there is legislation in this behalf, on the ground of unjust enrichment, the writ court cannot deny an assessee refund to tax collected from him without authority of law. 41.It is needless to mention that no one can be allowed to retain the amount collected in the name of tax or make claim for refund of tax or duty if it transpires that he has passed on the burden on the customers or others and in that case, the doctrine of unjust enrichment would debar such party to claim any benefit therefrom. The doctrine of unjust enrichment is a just and salutary doctrine. Under this doctrine, no person can seek to collect the duty from both ends. In other wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evade payment of duty. It is further contended that in any case there cannot be a demand beyond five years. The appellants have also submitted a copy of their letter dated 8.9.1982 addressed to the Assistant Collector in support of their contention that they had informed the department about the method adopted by them for determination of the assessable value and there was no suppression. However, the copy of their letter submitted in the appeal does not bear any acknowledgment. Therefore, it cannot be construed as having been actually submitted to the Assistant Collector or his office. The contention that part of the demand is even beyond five years has apparently been made through oversight as the demand dated 17.10.1988 was for the period September, 1982 to March, 1983 only and was well within five years. Accordingly, the impugned demand has to be upheld. The penalty has been imposed under Rule 173 Q (1) (a) of the Central Excise Rules, 1944. The said rule was as follows. 173-Q. Confiscation and penalty. (1) If any manufacturer, producer or licensee of a Warehouse, (a) removes any excisable goods in contravention of any of the provisions of these rules, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of their lawful revenues during the period stay operated against them... Because of the view we have taken the petitioners were not entitled to withhold this amount after having collected duties of excise and then utilise the same for their own business purposes. We are told that the bank rate of interest is 17% per annum on commercial transactions as it was and we are of the opinion that not only that the respondents should be allowed to encash the bank guarantees forthwith, they should also be entitled to interest on these amounts at the rate of 171 2% per annum from the date the duty became payable but was stayed under the orders of this Court. Though when the interim orders were made there was no direction of payment of interest but we find that under writ jurisdiction we have such powers to bring the parties to the same level once the petitions are dismissed and interim orders vacated. Petitioners must restore the advantage they got to the detriment of the public revenue and to which advantage they were not entitled as we have held the petitions to be without any merit. Similarly it was held by the Hon'ble Supreme Court in Agricultural Processed Food Products v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as directed started paying duty under TI 14F, after determining the assessable value after claiming the abatement of the duty paid under the said heading. The order determining the classification was challenged by the Appellant before the Hon ble Bombay High Court, where the issued was determined in favour of revenue. This order was challenged by the appellant before the Hon ble Supreme Court, and Hon ble Supreme Court decided the issue in favour of appellant, i.e classification of liquid hair dye was held under TI 68. 4.4 Appellant during the pendency of the matter before various authorities were paying the duty under TI 14F and collecting the same from their customer. However they were depositing to exchequer only the amount of duty that was required to be deposited under TI 68 as claimed by them. A show cause notice dated 17.10.1988 was issued to the appellant during the pendency of provisional assessments on the ground of undervaluation of the liquid hair dye. This show cause notice was adjudicated as per the order in original and impugned order in the present proceedings after the decision of the Hon ble Supreme Court in case of classification. 4.5 Following the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Provisional assessments are therefore provisional for all purposes i.e. demands or refunds. 2.6 The orders for provisional assessment therefore in our considered view are mandatory requirements of clearances under rule 9B(4) or 173F except in situations covered under rule 173CC. Bond execution is not found to be mandatory since the Bond conditions could be altered and are found to be only to safeguard revenue in case of an unexecuted demand. 3. In this view of the matter we find that in the case of Samrat International [1992 (58) E.L.T. 561 (S.C.)] the finding of the Hon ble Supreme Court - .....The amount of duty paid by him was obviously provisional and subject to result of final approval by the officer concerned. ... only confirms the provisions of the law while the stipulation of the Supreme Court in 1998 (99) E.L.T. 8 (SC) in para 28 and 29 only stipulate that the matter being merely sub judice will not result in the assessments being provisional. In case of Coastal Gases Chemicals (P) Ltd. - 1997 (92) E.L.T. 460 (S.C.), not only the view in Samrat case has been upheld but also the court has stipulated that the requirements of rule 9B whether complied wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) being in the nature of delegated legislation cannot be retrospective as have been held in the decisions referred to by the learned counsel for appellant. The Board vide its Circular F. No. 354/66/2001-TRU dated 21.6.2001 clarified that Rule 7 relating to provisional assessment and for charging of interest, will apply to cases in which provisional assessment is resorted to on or after 1.7.2001 and not to past cases of provisional assessment even if the assessments are finalized on or after 1.7.2001. In view of the above the demand for interest as upheld by the impugned order cannot be sustained and is set aside. 4.6 As the demand made under Section 11A is set aside so is the penalty imposed under Rule 173 Q of the erstwhile Central Excise Rules, 1944. 4.7 Impugned order refers and relies upon the decision of Hon ble Bombay High Court in the appellants case which admittedly has been set aside by the Hon ble Supreme Court. The approach of the Commissioner (Appeal) by relying on the decision which has been set aside is not a fair judicial practice and cannot be approved. 4.8 We do not find any merits in the impugned order and set aside the same. 5.1 Appeal is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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