TMI Blog2003 (1) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, requires to be set aside and is hereby set aside. - 2693 of 2000 - - - Dated:- 13-1-2003 - M.B. Shah and D.M. Dharmadhikari, JJ. [Judgment per : M.B. Shah, J.]. - The questions which were considered by the Customs, Excise Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as 'CEGAT') in Final Order No. 1467/99-B, dated 5-1-2000 arising out of Appeal No. E/3646/1990(B), were - whether, as the clearances in issue were effected against approved classification lists, the demand was sustainable in view of the law laid down by the Constitution Bench of this Court in Collector of Central Excise, Baroda v. Cotspun Limited [1999 (113) E.L.T. 353] and whether there was any ground for invoking first proviso to sub-section (1) of Section 11A of the Central Excise Act, 1944 (hereinafter referred to as 'the Act)'? 2.In these appeals, first question which requires decision is — what is the effect of following amendments in Section 11A of the Central Excise Act, 1994 which came into force w.e.f. 17-11-1980 by the Finance Act, 2000 (10 of 2000). The relevant part of unamended Section 11A was as under : - "Section 11A. - Recovery of duties not levied or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prior approval of the Chief Commissioner of Central Excise". 4.After amendment, relevant part of Section 11A reads thus "Section 11A. - Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. - (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, whether or not such non-levy or non-payment, short levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder, a Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of that section shall be deemed to be and to always have been, for all purposes, validly and effectively issued or served under that section, notwithstanding any approval, acceptance or assessment relating to the rate of duty on or value of, the excisable goods by any Central Excise Officer under any other provision of the Central Excise Act or the rules made thereunder. Any action taken or anything done or purporting(2) to have been taken or done under Section 11A of the Central Excise Act at any time during the said period shall he deemed to be and to have always been, for all purposes, as validly and effectively taken or done as if 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 during the period specified in sub-section (1) on any excisable goods under the Central Excise Act, shall be deemed to be and shall be deemed to always have been, as validly levied, assessed or collected as if sub-section (1) had been in force at all material times; (b) no suit or other procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant was liable to pay the differential duty. A Bench of two learned Judges of this Court said : "Once the Department accepted the price list, acted upon it and the goods were cleared with the knowledge of the Department, then, in absence of any amendment in law or judicial pronouncement, the reclassification should be effective from the date the Department issued the show cause notice. The reason for it is clearance with the knowledge of the Department and no intention to evade payment of duly." The Court thereafter observed - "In the case of Ballarpur Industries Ltd. v. Asstt. Collector of Customs Central Excise and Ors. [1995 Suppl. (3) SCC 429] decided by a Bench of three learned Judges, the observations in the judgment in Rainbow Industries were "confined to the facts of that case". The Bench placed reliance upon Rule 10 and held that, on a plain reading of that provision as also of Section 11A, the show cause notice "which could be issued within the time-limit prescribed under the relevant provision could only be in relation to the duty of excise for a period prior to the issuance of show cause notice. There could be no reason for the issuance of a show cause notice f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise 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 questioned by the issuance to the assessee of a show cause notice. It is only when the correctness of the approval is challenged that an approved classification list ceases to be such. The15. levy of excise duty on the basis of an approved classification list is not a short levy. Differential duty cannot be recovered on the ground that it is a short levy. Rule 10 has then no application." 10.Learned Counsel appearing on behalf of the assessee submitted that the aforequoted amendment in the Act does not change the basis or the foundation of the judgment rendered by this Court in Cotspun's case (supra). It is his contention that once the excise duty is collected on the basis of the approved classification, price list or on the basis of the assessment order it cannot be held that there was short levy of excise duty. In such cases levying of excise duty on the basis of approved classification or final assessment order is the correct levy and therefore the amended Section 11A would not be applicable. 11.In our view, there is no substance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, after amendment, this can be done by the Central Excise Officer within a period of one year from the relevant date. As amendment is given retrospective effect, it would be applicable to all the pending proceedings. By this amendment, the basis for arriving at the conclusion that Rule 10 (now Section 11A) does not deal with the classification list or relate to re-opening of classification list is altered by specifically providing that in such cases also, show cause notice could be issued. Hence, the conditions on which the judgment was based are fundamentally altered and the decision in Cotspun's case would not have been rendered if amended Section 11A was in existence. This is done by re-enacting retrospectively a valid and legal provision. It is settled principle that legislature can change the basis on which a decision is given by the Court and thus change the law in general. It is also well settled law that the legislature can always render a judicial decision ineffective by enacting a valid law on the topic within its legislative field by fundamentally altering or changing its character retrospectively. {[Re : Indian Aluminium Co. v. State of Kerala [(1996) 7 SCC 637]}. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication list was erroneous, he would not be in a position to recover the difference of excise duty from the purchaser of the excisable goods. It is contended that presuming that the approved price list was erroneous or order was erroneous because of the mistake of the concerned officer of the department, assessee cannot be put to loss otherwise it would cause hardship to the assessee. It is also contended that this power can be misused by invoking the proviso to sub-section (1) of Section 11, merely stating that duty of excise has been short levied because of wilful statement or suppression of facts. 16.In our view, it would be difficult to accept the aforesaid contention. It is well settled law that merely because a law causes hardship, it cannot be interpreted in a manner so as to defeat its object. It is also to be remembered that the Courts are not concerned with the legislative policy or with the result, whether injurious or otherwise, by giving effect to the language used nor it is the function of the Court where the meaning is clear not to give effect to it merely because it would lead to some hardship. It is the duty imposed on the Courts in interpreting a particular prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st date on which such return is to be filed or in any other case the date on which the duty is to be paid under the Act or the Rules. Similarly, sub-clauses (b) or (c) also provide the date of final assessment or date of erroneous refund as a relevant date, which cannot be stated to be in any way unreasonable for correcting the errors or mistakes. 19.These contentions are exhaustively dealt with in M/s. Ujagar Prints and Others (II) v. Union of India and Others [(1989) 3 SCC 488] wherein after considering various decisions, this Court held thus :- "A competent legislature can always validate a law which has been declared by courts to be invalid, provided the infirmities and vitiating infactors noticed in the declaratory judgment are removed or cured. Such a validating law can also be made retrospective. If in the light of such validating and curative exercise made by the legislature - granting legislative competence - the earlier judgment becomes irrelevant and unenforceable, that cannot be called an impermissible legislative overruling of the judicial decision. All that the legislature does is to usher in a valid law with retrospective effect in the light of which earlier judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be issued within the prescribed period. 22.Next question is — whether there was any ground for invoking first proviso to sub-section (1) of Section 11A of the Act? It is submitted that M/s. Easland Combines (hereinafter referred to as 'the Company') is a small scale industrial undertaking established in the year 1973 with the factory at Trivandrum and engaged in the manufacture of various types of Water Taps out of Iron, Aluminium and Brass classified under sub-heading 8481.80 of the Schedule of the Central Excise Tariff Act. The said factory at Trivandrum was registered with the Department of Industries at Kerala State as a Small Scale Industry vide Registration No. T/SI/235/75, dated 23-5-1973. The Company set up another factory at Coimbatore holding Central Excise licence L.4 No. 1/T.I.68/82, as a branch of the main undertaking at Trivandrum. 23.For the years 1986-87, the Company filed a classification list - S. No. A/51/86-87, dated 26-5-86 in respect of excisable goods produced by them and claimed exemption applicable to small scale manufacturers in terms of Notification No. 175/86, dated 1-3-1986 (as amended). The said classification list was verified by the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that as there was misstatement by the appellant, the duty is demandable from the appellants- Company for the extended period and hence dismissed the appeal. 29.It is settled law that for invoking the extended period of limitation duty should not have been paid, short levied or short paid or erroneously refunded because of either fraud, collusion, wilful mis-statement, suppression of fact or contravention of any provision or rules. This Court has held that these ingredients postulate a positive act and, therefore, mere failure to pay duty and/or take out a licence which is not due to any fraud, collusion or willful mis-statement or suppression of fact or contravention of any provision is not sufficient to attract the extended period of limitation. 30.The present case is not a case where the Company was not entitled to have registration as SSI unit at Coimbatore. It was a mistake of the concerned clerk on the assumption that as the Company was registered as SSI unit at Trivandrum the Company was not required to obtain such certificate at Coimbatore. From such mistake it would be difficult to arrive at a conclusion that it was wilful mis-statement or suppression of fact for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the parties that for determining other questions, matter is required to be remitted. Hence, the appeal is allowed. The impugned order is set aside and the matter is remitted to the Tribunal for deciding it afresh in accordance with law. C.A. Nos. 3805-3807 of 2000 39.These three appeals arise out of the common order passed by the Tribunal. In two cases, demands were within six months from the date of the show cause notice. In one case, extended period was invoked. The Tribunal arrived at the conclusion that considering the facts of the case, the extended period could not be invoked and, therefore, charge of misclassification, suppression etc. requires to be set aside. The Tribunal held that normal period of limitation of six months would be available. The Tribunal however held that in view of the decision in Cotspun's case, the demand was not enforceable and the appeals were allowed. 40.In view of the amended statutory provisions and for the reasons recorded above, the demands which are within period of limitation could be enforced. In the result, the appeals are partly allowed accordingly. C.A. Nos. 302-303 of 2002 41.In these appeals, Final Order No. 83/2000-A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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