IMPORTANT POINT
Tribunal was not justified in its conclusion that the actions initiated were beyond the prescribed period of Limitation under Section 11A of Central Excise Act, 1944. The matter is remanded to Tribunal with necessary directions.

Headnote:Central Excise Act, 1944-Section 11A-Recovery of duties not levied or not paid or short-levied or short paid or erroneously refunded-Notification No. 201/79 issued under Rule 8(1) of Central Excise Rules, 1944-Benefit granted to manufacturer in respect of the duty already paid on inputs Malt and Malt Extracts under T.I. 68-Appendix to notification paras 3 and 5(e) and (d)-Scope and ambit of said paras-Whether Section 11A and said paras 3 and 5(e) and (d) operate in same field or in different fields? (different fields)-Show cause notice by Revenue to assessee why the amount of duty involved in the set off be not recovered from it under para 3 of Appendix of notification-Tribunal holding that it was beyond the prescribed period of limitation under Section 11A of the Act-Appeals to Supreme Court -Whether Tribunal was right? (No, matter remanded to Tribunal) (Central Excise Act, 1944-Section 38A).
Held (referring to Section 11A) : A bare reading of the provisions makes it clear that it deals with recovery of duty not levied or not paid or short-levied or short-paid or erroneously refunded. The scheme under the notification no. 201/79 operated in a different field altogether. There was no short-levy or non-levy. The levy was made as per the applicable statutes. Only a benefit was granted to the manufacturer in respect of the duty already paid on the inputs which constitute raw materials or component parts in the excisable goods. The benefit was granted by exercise of powers conferred by sub-rule (1) of Rule 8 of the Rules providing exemption of all excisable goods on which duty of excise is leviable and in the manufacture of which some other goods have been used as inputs. If the inputs have suffered duty, the quantum thereof was allowed to be set-off. There is no variation of the duty leviable. That is invariable. What is determined is the quantum of duty payable after adjustment of the duty paid on the inputs. Section 3 is the charging Section and Section 4 deals with valuation of excisable goods for the purposes of charging duties of excise. Section 11A, which was introduced with effect from 17.11.1980, provides for recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. It is to be noted that the scheme under the notification is essentially linked with quantification and collection. The method of collection does not affect the essence of duty, but only relates to the machinery of collection for administrative convenience. As noted by this Court in Assistant Collector of Central Excise, Calcutta Division vs. National Tobacco Co. of India Ltd. (1972 (2) SCC 560), the term "levy" is wider in its import than the term "assessment". It may include both "imposition" as well as "assessment". Imposition is generally used for levy of a duty or tax by legislative provisions indicating the subject matter of levy and rate of levy. Levy of duty does not mean actual collection, there is a conceptual difference. The charging provision Section 3(1) specifically says: "There shall be levied and collected in such a manner as may be prescribed the duty of excise.....". Both the expressions "levy" and "collected" are used. Therefore, lesser collection of duty because the adjustment of duty paid on inputs is not a case of short-levy as contended by learned counsel for assessee. The notification in question was issued under sub-rule (1) of Rule 8. Said Rule, omitted vide Notification No. 19/88 CE dated 1.7.1988 dealt with power to authorize exemption from duty in special cases. If exemption is granted under Rule 8(1), goods do not cease to be excisable goods and levy of duty is not erased. Emphasis was on the duty of excise leviable on the manufactured item and duty of excise paid on the inputs available for adjustment. Therefore, Section 11A had no application to such a situation. To that extent the Tribunal was not justified in its conclusions; but that is not the end of the controversy. It appears that the assessee had specifically questioned applicability of the notification after same was rescinded. Tribunal has not recorded any finding in this regard. The effect of Section 38A, which was introduced with retrospective effect, is also to be considered. We, therefore, deem it proper to remand the matter back to the Tribunal for consideration of these aspects. If the Tribunal holds that after the notification was rescinded w.e.f. 1.3.1986; paragraph 3 of the Appendix became inoperative, then the position would be different. While considering that aspect the effect of Section 38A has to be kept in view. In case the Tribunal comes to the conclusion that paragraph 3 of the Appendix was applicable because of Section 38(A)(C), it has to consider the further stand of the assessee about adjustment in the credit account maintained under paragraph 5 of the Appendix. Needless to say that the Tribunal shall consider these aspects after due notice to the parties. Liability, if any, of the sellers of inputs except Barmalt is a controversy with which we are not presently concerned and, therefore, we do not think it necessary to express any opinion in that regard. The appeals are accordingly disposed of. (Paras 10 and 11)

JUDGMENT

Arijit Pasayat, J.-These appeals are directed against common judgment of the Customs Excise & Gold (Control) Appellate Tribunal, New Delhi (in short the Tribunal ).

2. Background factual matrix involved is undisputed and is essentially as follows:

M/s. H.M.M. Limited (subsequently known as M/s. Smithkline Beecham Consumer Health Care Ltd.), (hereinafter referred to as the assessee ) was availing set off under notification No. 201/79 dated 4.6.1979 in respect of inputs, namely, Malt and Malt extract under T.I. 68, received by it from M/s. Malt & Co. (India) Pvt. Ltd., M/s. Barmalt Ltd. and M/s. A.K. Malt (P) Ltd. during the years 1977 to 1985. The said notification was issued in exercise of powers conferred by sub-rule (1) Rule 8 of the Central Excise Rules, 1944. By the said notification, all excisable goods on which duty of excise is leviable and in the manufacture of which any goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (presently Central Excise Act, 1944, in short the Act ) have been used as raw materials or components parts from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the inputs. The excisable goods, and the raw materials and the component parts were referred to as "the said goods" and "the inputs" respectively in the notification. In the Appendix to the notification, in paragraphs 3 and 5 (d) and (e) it was, inter alia, provided as follows:

xxx xxx xxx

"3. If the duty paid on the inputs (on which credit has been taken) is varied subsequently due to any person resulting in payment of refund to, or recovery of more duty from, the manufacturer of the inputs, the credit taken shall be varied accordingly by adjustment in the credit account maintained under paragraph 5 of this Appendix or in the account-current maintained under sub-rule (1) of rule 9, or sub-rule (1) of rule 173-G, of the Central Excise Rules, 1944, or, if such adjustment be not possible for any reason, by refund to, or as the case may be, cash recovery from the manufacturer of the said goods.

xxx xxx xxx

5. A manufacturer of the said goods shall-

(d) maintain an account in Parts I and II of Form R.G. 23 in Appendix I to the Central Excise Rules, 1944;

(e) maintain in respect of the duty payable on the said goods an account-current with the Collector of Central Excise with adequate credit balance to cover payment of Central Excise duty leviable on the said goods cleared at any time."

3. The scope and ambit of the afore-said paragraphs form subject matter of consideration in these appeals. Sellers of the inputs as described above, filed writ applications before the Delhi High Court and took the stand that Malt and Malt Extracts were not dutiable in terms of notifications No. 55/75. The High Court accepted this stand of the Sellers. The Sellers had paid excise duty on the inputs, and, therefore, the assessee had taken credit in respect of the amount of duty paid on the inputs. Pursuant to the High Court s order appellant had refunded the duty. Barmalt took refund of the amounts paid on 8.11.1985 and 14.11.1985, while Malt India was refunded the amount involved on 8.5.1987. On 7.9.1987 a Demand show-cause notice was issued by the Assistant Collector requiring it to show-cause as to why the amount of duty involved in the set off be not recovered from it under paragraph 3 of the Appendix to the notification No.201/1979. Assessee submitted its reply taking the stand that the notice was issued beyond the prescribed period of limitation under Section 11A of the Act. In any event, cash recovery was not permissible and what at the most the authorities could do was to adjust the amount from the credit account maintained in terms of paragraph 5. The plea did not find acceptance and by order dated 22.12.1987 the Assistant Collector confirmed the demand. Appeals before the Collector of Central Excise (Appeals) did not bring

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Judicial Analysis

SupremeToday

2002 Supreme(SC) 1293

IMPORTANT POINTTribunal was not justified in its conclusion that the actions initiated were beyond the prescribed period of Limitation under Section 11A of Central Excise Act, 1944. The matter is remanded to Tribunal with necessary directions.

Judicial Analysis

IMPORTANT POINT
Tribunal was not justified in its conclusion that the actions initiated were beyond the prescribed period of Limitation under Section 11A of Central Excise Act, 1944. The matter is remanded to Tribunal with necessary directions.