Important point
The 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.

Judgment

Bharucha, J.-This appeal has been referred to a Constitution Bench for the reason that there are two conflicting three Judge Bench deci­sions of this Court on the point at issue.

2. Briefly stated, the facts are : The assessee-respondent manufac­tures NES yarn. It had filed classification lists with the Excise authorities, the appellants, which had been approved under the provi­sions of Rule 173B of the Central Excise Rules, 1944. The approval classified the NES yarn under old Tariff Item 19-I(2)(a)(2)(e). On 28th September, 1977, a notice was issued by the Excise authorities to the assessee to re-open the assessment for the period February, 1977 to May, 1977. The reason for so doing was that the NES yarn ought to have been correctly classified under old Tariff Item 19-I(2)(F). A demand for differential duty was made. A second show cause notice was issued by the Excise authorities to the assessee on 18th November, 1977 for the period 1st June, 1977 to 17th June, 1977. The assess­ment for this period was sought to be re-opened for the same reason. Again, a demand for differential duty was made. These show cause notices were amended by corrigenda dated 28th February, 1978 and 1st April, 1978. The assessee replied to the show cause notices on 24th May, 1978. It contended that the count of the NES yarn was determinable and it had been correctly classified. It also contended that the approved classification lists could not be re-opened and, therefore, the demands for differential duty could not be enforced. The Assistant Collector upheld the asses­see’s contention that the duty liability having been ascertained on the basis of an approved classification list, the question of short levy of duty did not arise. The Appellate Collector allowed the appeal of the Excise authorities, reclassified the NES yarn and confirmed the demands for differential duty. The assessee approached the Tribunal in appeal. The Tribunal held that the revised assessment could be made effective only prospectively from the date of the show cause notices and not with reference to earlier removals made under approved classi­fication lists. Accordingly, the demands were quashed.

3. The Excise authorities are in appeal against the order of the Tribunal. The assessee had not appeared at the stage when the matter was before a two and then a three Judge Bench. Amicus Curiae were appointed, and we are beholden to them for assisting us.

4. Rule 10 of the Central Excise Rules, as it read at the relevant time and so far as it is relevant for our purposes, is set out :

“10. Recovery of duties not levied or not paid, or short levied or not paid in full or erroneously refunded.-(1) Where any duty has not been levied or paid or has been short-levied or erroneously refunded or any duty assessed has not been paid in full the proper officer may, within six months 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 to whom the refund has erroneously been made, or which has not been paid in full, requiring him to show cause why he should not pay the amount specified in the notice.”

A proviso to the above increases the period of six months to five years where there has been fraud or the like on the part of the asses­see.

5. Rule 173B falls in the Chapter of the Central Excise Rules that deals with the self-removal procedure. It requires an assessee to file before the proper Excise Officer for approval a list of the goods that he proposes to clear. The list is required to contain a description of the goods produced or manufactured by him, the goods that he intends to remove and of excisable goods already deposited or likely to be deposited without payment of duty in his warehouse, and to indicate the tariff entry under which the goods that he intends to remove fall, the rate of duty leviable thereon and such other particulars as may be required. Sub-rule (2) reads thus :

“(2) The p