TMI Blog1972 (8) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... t the factory itself for the levy and collection of tax. The Company was required to furnish quarterly consolidated price lists which used to be accepted for purposes of enabling the Company to clear its goods, but, according to the Collector, these used to be verified afterwards by obtaining evidence of actual sales in the market before issuing final certificates that the duty had been fully paid up. The particulars of the cigarettes to be cleared were furnished by the Company on forms known as A.R. I. forms required by Rule 9 of the Central Excise Rules. For facilitating collection of duty, the Company maintained a large sum of money in a current account with the Central Excise authorities who used to debit in this account the duty leviable on each stock of cigarettes allowed to be removed. This current account, known as "personal ledger account", was maintained under the third proviso to Rule 9 which lays down : ***** 2. It appears that the company used to furnish its quarterly price lists to the Collector on forms containing nine columns including one to show the "distributors' selling price". Until July, 1957, so long as this form was used by the Company, no difficulty see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Judge said : "Nothing in this order will prevent the respondent from proceeding to take any step that be necessary for such assessment or for the realisation of the revenue in accordance with the law." 4. The learned Judge had also held that neither the basis adopted by the Company nor that put forward by the Collector was correct. The learned Judge pointed out the correct basis which was considered by him to be in consonance with the provisions of Section 4, sub-section (a) of the Act. He indicated the various factors required by Section 4 of the Act which had to be taken into account and held : "The determination as to whether a wholesale market exists at the site of the factory or the premises of manufacture or production etc. or which is the nearest wholesale market, or the price at which the goods or goods of like kind and quality are capable of being sold must necessarily be complicated question and must be determined carefully upon evidence and not arbitrarily. Such determination cannot wholly be made ex parte, that is to say, behind the back of the assessee. A satisfactory determination can only be made by giving all information to the assessee and after givin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 14th April, 1958, (iv) beginning July, 1958 dated 14-7-1958, and (v) beginning October, 1958 dated nil. 2. We now propose to complete the assessments for the said periods from the evidence in our possession from which it appears : (i) that there is no wholesale market for the goods covered by your price lists in or near the factory or the place of manufacture and that the nearest wholesale market for the sale is the Calcutta market; (ii) the wholesale cash price of the articles in question at the time of sale and/or removal of the goods at the Calcutta market at which goods of like kind or quality are sold or are capable of being sold have been ascertained by us and the evidence at our disposal reveals that the prices quoted by you in your price-lists are not correct. 3. The prices are as per chart annexed hereto which has been prepared on the basis of available evidence in terms of section 4 (a) of the Central Excises and Salt Act, 1944. The vouchers mentioned in the chart are available for your inspection at any time next week during office hours. After obtaining inspection of the vouchers please attend at our office at 5 Clive Row, Calcutta on 2nd May 1960 at 10.30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the completion of any such test, be assessed provisionally. (2) When the owner of any goods in respect of which the duty has been assessed provisionally under sub-rule (1) has paid such duty, the proper officer may make an order allowing the goods to be cleared for home consumption or for exportation, as the case may be, and such order shall be sufficient authority for the removal of the goods by the owner : Provided that before making any such order the proper officer shall require the owner to furnish a bond in the proper form binding the owner to pay the differential duty when the final assessment is made. (3) When the duty leviable on such goods is assessed finally in 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 duty finally assessed, the owner of the goods shall pay the deficiency or be entitled to a refund, as the case may be." 9. No order directing provisional assessment, contemplated by Rule 10B (applicable at the relevant time) has been placed before us. Nor was the Company asked by Collector to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain statement both the notices were assailed in paragraph 25 (ii) in the following words : "The respondent has mala fide and without jurisdiction issued the said impugned notices pretending to falsely state that the aggregate sum therein mentioned has been provisionally debited in your petitioner's account and pretending to intimate to your petitioner that the respondent proposed to complete the assessment, and thereby, he is seeking, under the guise of completing an alleged assessment which had already been completed and duty in respect whereof had already been paid, to do indirectly what he could not do directly inasmuch as Rule 10A of the said Rules has no application to the facts of the case and inasmuch as recovery of any duty which might have been short levied under Rule 10 of the Rules is barred by limitation." This assertion was met by a categorical denial by the Collector in paragraph 26 (ii) of the Collector's affidavit in reply where it was stated that it was denied "that Rule 10-A of the said Rules had no application to the facts of the case as alleged or that the recovery of any duty which had been short levied was barred by limitation under Rule 10 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty has for any reason been short-levied, or of any other sum of any kind payable to the Central Government under the Act or these rules, such duty, deficiency in duty or sum shall, on a written demand made by the proper officer, be paid to such person and at such time and place, as the proper officer may specify." 14. The two rules set out above occur in Chapter III of the Central Excise Rules, 1944 headed "Levy and Refund of and Exemption from Duty". Rule 7 merely provides that the duty leviable on the goods will be paid at such time and place and to such person as may be required by the rules. R. 8 deals with power to authorise exceptions in special cases. Rule 9 (1) provides for the time and manner of payment of duty. This rule indicates that ordinarily the duty leviable must be paid before excisable goods are removed from the place where they are manufactured or stocked, and only after obtaining the permission of the officer concerned. The third proviso to R. 9 has already been set out above. R. 9 (2) provides for the recovery of duty and imposition of penalty in case where Rule 9, sub-rule (1) is violated. Rule 9A specifies the date with reference to which the duty payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless the procedure for a "provisional assessment" under Rule 10-B (now R. 9-B) is adopted. But, if no quasi-judicial proceeding, which could be described as an "assessment" either under R. 52 or "provisional assessment" under R. 10-B (now Rule 9-B) takes place at the proper time and in accordance with the rules, is the Collector debarred completely afterwards from assessing or completing assessment of duty payable? That seems to us to be the real question to be decided here. 18. One of the arguments on behalf of the Collector was that no "assessment" for the purpose of determining the value of excisable goods, having taken place in the case before us, there could be no "levy" in the eye of law. It was urged that, even if there was no "provisional assessment", as contemplated by Rule 10-B, whatever took place could, at the most, be characterised as an "incomplete assessment", which the Collector could proceed to complete even after the removal of the goods. It was contended that such a case would be outside the purview of R. 10 as it was not determined whether there actually was a short levy. Hence, it was submitted, there was no question of a proceeding barred by the limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, generally used in this country for the actual procedure adopted in fixing the toiletry to pay a tax on account of particular goods or property or whatever may be the object 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, there is a levy". We think that, although the connotation of the term "levy" seems wider than that of "assessment", which it includes, yet, it does not seem to us to extend to "collection". Article 265 of the Constitution makes a distinction between "levy" and ''Collection". We also find that in N. B. Sanjana v. The Elphinstone Spg. . Wvg. Mills Co. Ltd. AIR 1971 SC 2039 at p. 2045 this Court made a distinction between "levy" and collection" as used in the Act and the Rules before us. It said there with reference to Rule 10 : "We are not inclined to accept the contention of Dr. Syed Mohammad that the expression 'levy' in Rule 10 means actual collection of some amount. The charging provision Section 3 (1) specifically says "There shall be levied and collected in such a manner as may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules, as they stood at the relevant time, dealt with collection and not with assessment. They have to be harmonised. In N.R. Sanjana's case (supra) this Court harmonised them by indicating that R. 10A which was residuary in character, would be inapplicable if a case fell within a specified category of cases mentioned in Rule 10. 24. It was pointed out in Sajana's case, AIR 1971 SC 2039 (supra) that the reason for the addition of the new Rule 10A was a decision of the Nagpur High Court in Chhotabhai Jethabhai Patel and Co. v. Union of India, AIR 1932 Nag. 139 so that a fresh demand may be made on a basis altered by law. The Excise authorities had then made a fresh demand under the provisions of Rule 10A, after the addition of that Rule, the validity of which challenged but upheld by a Full Bench of the High Court of Nagpur. This Court, in Chhotabhai Jethabhai Patel Co.v. Union of India, (1962) Supp. 2 SCR 1=(AIR 1962 SC 1006) also rejected the assessee's claim that Rule 10-A was inapplicable after pointing out that the new rule had been specifically designed "for the enforcement of the demand like the one arising in the circumstances of the case". 25. We think that Rule 10 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which a notice is sent would not invalidate it if the power to issue such a notice was there. 28. The notice alleges that it is a case of "incomplete assessment". The allegations contained in it have been characterised by the learned Counsel for the Company as a change of front intended to cover up the neglect of the Collector in failing to comply with the correct procedure of making either an assessment before delivery contemplated by Rule 52 or a provisional assessment under Rule 10-B. We are unable to hold, either upon the findings given by the High Court or upon facts transpiring from the affidavits filed by the parties that the notice was a mere cloak for some omission or error or inadvertence of the Collector in making a levy or an assessment. 29. We may point out that R. 10 itself has been amended and made more reasonable in 1969 so as to require a quasi-judicial procedure by serving a show cause notice "within 3 months from the date on which the duty or charge was paid or adjusted in the owner's account current, if any". This amendment made on 11-10-1969, indicates that the quasi-judicial procedure, for a finding on an alleged inadvertence, error, collusion, or mis-cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt's view was based on an application of the rule of construction that where a mode of performing a duty is laid down by law it must be performed in that mode or not at all. This rule flows from the maxim : "Expressio unius est exclusio alterius". But, as was pointed out by Wills, J. in Colquhoun v. Brooks, (1888) 21 QBD 52 at p. 62 this maxim "is often a valuable servant, but a dangerous master.........". The rule is subservient to the basic principle that Courts must endeavour to ascertain the legislative intent and purpose, and then adopt a rule of construction which effectuates rather than one that may defeat these. Moreover, the rule of prohibition by necessary implication could be applied only where a specified procedure is laid down for the performance of a duty. Although Rule 52 makes an assessment obligatory before goods are removed by a manufacturer, yet, neither that rule nor any other rule, as already indicated above, has specified the detailed procedure for an assessment. There is no express prohibition anywhere against an assessment at any other time in the circumstances of a case like the one before us where no "assessment", as it is understood in law, took place a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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