(1) - In exercise of power conferred on the central government by Ss. (2, of Section 86 of the central Excises and Salt Act, 1944 (hereinafter called the Act), a show cause notice dated 1/10/1981 was issued to the respondent-assessee as the central government had, on the examination of the records of the case,, tentatively, taken the view that the order in appeal was .not proper, legal and correct. According to the central government in the matter of calculation of duty two Notification Nos. 21/77, dated 26/2/1977 and 198/96, dated 16/6/1976 came into play but the question was as to which had to be applied first for the purpose of working out the excise duty. The respondents, manufacturers of scooters had availed of the proforma credit of duty by them on I.C. Engines used in the manufacture of scooter. They have further availed of 25% reduction in excise duty under Notification No. 198/76 dated 16/6/1976. The net duty liability was worked out on the basis of assessable value multiplied by 75% of the effective rate of duty. The duty amount arrived at was adjusted through the proforma credit. However, the Assistant Collector, central Excise, Sangali held that the amount of proforma credit equivalent to the duty on I.C. Engines had to be deducted first from the duty leviable.on scooters. Only, thereafter, would the assessee be entitled for reduction in duty under Notification No. 198/76. The Collector of central Excise (Appeals), Bombay, after considering the records and submissions made before it, setting aside the order of the Assistant Collector held that the assessee had rightly applied the Notification No. 198/76 first in point of time and thereafter, the Notification No. 21 /77. The central government was of the tentative view that this procedure adopted for working of the Excise Duty was not correct. The tentative view of the central government is stated thus :

"IT would, therefore, appear that first the duty leviable on the Motor Vehicle had to be determined by taking into account Notification 21/77 and thereafter the concession under Notification No. 198/76 is to be worked out. It would appear that this position in law would not be altered by the fact that the assessee was following the Rule 56A procedure for availaving the benefit of Notification No. 21/77. The Appellate Collector, therefore, appears to have added in allowing the appeal and holding that there was no question of first deducting the amount of proforma credit and then working out the duty payable by applying 25% deduction".

On this basis the central government invoked the power conferred by Section 36(2 of the Act.

(2) SECTION 36(1 empowers the central government of receipt of an application from any person aggrieved by any decision or order passed under the Act or the Rules made thereunder by any central Excise Officer or the central Board of Excise and Customs and from, which no appeal lies to reverse or modify such decision or order. Ss. (2 which has three provisions thus reads as under : Sub-section (2 of Section 36 :

"(2 The central government may, of its own motion or otherwise, call for and examine the record of any proceeding in which any decision or order has been under Section 35 or Section 35A of this Act for the purpose of satisfying itself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as it thinks fit: Provided that no decision or order shall be varied so as to prejudicially affect any person unless such person is given a reasonable opportunity of making a representation and, if he so desires, of being heard in his defence: Provided further that no proceedings shall be commenced under this sub-sec- tion in respect of any decision or order (whether such decision or order has been passed before or after the coming into force of this sub-section) after the expiration of a period of one your from the date of such decision or order : Provided also that where the centra