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CASE NO.:

Appeal (civil) 2693 of 2000

PETITIONER:

EASLAND COMBINES COIMBATORE

RESPONDENT:

COLLECTOR OF CENTRAL EXCISE COIMBATORE

DATE OF JUDGMENT: 13/01/2003

BENCH:

M.B. SHAH & D.M. DHARMADHIKARI

JUDGMENT:

JUDGMENT

2003(1) SCR 98

The Judgment of the Court was delivered by

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 ELT 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')?

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 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, a Central Excise 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 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 suppression of facts or

contravention of any of the provisions of this Act or of the rules made

thereunder with intent to evade payment of duty, by such person or his

agent, the provisions of this sub-section shall have effect, as if, for the

words "six months", the words "five years" were substituted."

Clause 97 of the Finance Act provided that in sub-section (1) of Section

11A of the Act following shall be added:-

(a) in the opening portion, for the words "erroneously refunded", the

words "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", shall be substituted and shall be deemed

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to have been substituted on and from the 17th day of November, 1980;

(b) for the words "six months", wherever they occur, the words "one year"

shall be substituted;

(c) after the proviso and before the Explanation the following provisos

shall be inserted namely:-

"Provided further that where the amount of duty which has not been levied

or paid or has been short-levied or short-paid or erroneously refunded is

one crore rupees or less a notice under this sub-section shall be served by

the Commissioner of Central Excise or with his prior approval by any

officer subordinate to him:

Provided also that where the amount of duty which has not been levied or

paid or has been short-levied or short-paid or erroneously refunded is more

than one crore rupees, no notice under this sub-section shall be served

without the prior approval of the Chief Commissioner of Central Excise".

After amendment, relevant part of Section 11A reads thus

"Section 11 A.-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 elevant 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 short-levied or short-

paid or erroneously refunded by reason of fraud, collusion or any wilful

mis-statement or suppression of facts, or contravention of any of the

provisions of this Act or of the rules made thereunder with intent to evade

payment of duty, by such person or his agent, the provisions of this sub-

section shall have effect, as if, for the words one year, the words "five

years" were substituted."

For our purpose, relevant part of the amended Section 11A would be "when

any duty of excise has been short levied or short paid, whether or not such

short levy or short payment was on the basis of any approval, acceptance or

assesment relating to the rate of duty on valuation of excisable goods

under any other provision of the Act or the Rules, a Central Excise Officer

may within one year from the relevant date, serve notice on the person

chargeable with the duty which has been short levied or short paid

requiring him to show cause why he should not pay the amount specified in

the notice."

In the first proviso to the said Section, there is no change.

At this stage, we would refer to the statement of objects and reasons for

amending Section 11A:-

"Clause 106 seeks to validate certain action taken under section I1A of the

Central Excise Act with retrospective effect from 17th November, 1980, so

as to prescribe that the notices issued under the said section for non-

recovery or short-recovery or erroneous refund of duties for a period of

six months or five years in certain situations will prevail notwithstanding

any approval, acceptance or assessment of duty under the provisions of the

Central Excise Rules. The Clause also seeks to validate actions taken in

the past on this basis in conformity with the legislative intention. This

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amendment has become necessary to overcome certain judicial

pronouncements."

Further, the clause 110 of the Finance Act validating actions taken under

Section 11A provides as under:-

"110.(1) Any notice issued or served on any person under the provisions of

section 11A of the Central Excise Act during the period commencing on and

from the 17th day of November, 1980 and ending on the date on which the

Finance Act, 2000 receives the assent of the President (hereinafter

referred to as the said period) demanding duty on account of non-payment,

short payment, non-levy, short-levy or erroneous refund within a period of

six months or five years, as the case may be, from the relevant date as

defined in clause (ii) of sub-section (3) 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 provisions of

the Central Excise Act or the rules made thereunder.

(2) Any action taken or anything done or purporting to have been taken or

done under section 11A of the Central Excise Act at any time during the

said period shall be 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 (I) 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 proceedings shall be maintained or continued in any

court, tribunal or other authority for the refund of, and no enforcement

shall be made by any court of any decree or order directing the refund of

any such duties of excise which have been collected and which would have

been validly collected if sub-section (1) had been in force at all material

times;

(c) recovery shall be made of all such duties of excise which have not

been collected or, as the case may be, which have been refunded but which

would have been collected or, as the case may be, would not have been

refunded, if sub-section (1) had been in force at all material times.

Explanation-For the removal of doubts, it is hereby declared that no act or

omission on the part of any person shall be punishable as an offence which

would not have been so punishable if this section has not come into force."

The aforesaid amendment is given retrospective effect from 17.11.1980 i.e.

the date on which Section 11 (A) of the Act was introduced.

In the light of the aforesaid statutory provisions, let us now consider the

relevant portion of the judgment rendered in Cotspun 's case (supra). The

said case was referred to the Constitution Bench as there were two

conflicting three-Judge Bench decisions of this Court on the point in

issue. In paragraph 8, the Court approved the finding in Rainbow Industries

(P) Ltd. v. Collector of Central Excise, Vadodara [1994] 6 SCC 563 by

holding thus:-

8. In Rainbow Industries (P) Ltd. v. Collector of Central Excise, Vadodara

[1994] 6 SCC 563 the appellant was a manufacturer of dyestuff. He had filed

a price list as required by Rule 173C of the Central Excise Rules which was

approved by the Excise authorities with effect from 1st October, 1975.

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About a year thereafter, the Assistant Collector issued a notice requiring

the appellant to show cause why the net assessable value should not be

revised and differential duty recovered. The appellant replied to the show

cause notice but his contentions were not accepted up to the stage of the

Tribunal. In the challenge before this Court to the order of the Tribunal

it was contended that the price list submitted by the appellant having been

accepted and acted upon, the Excise authorities were precluded from

challenging the same and, therefore, from claiming that the appellant 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 duty."

The Court thereafter observed-

"In the case of Ballarpur Industries Ltd. v. Asstt. Collector of Customs

and 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 provisions

as also of Section 11 A, 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 for the period subsequent to the notice as in that case the

necessary corrective action could always be taken. But Rule 10 with which

we are concerned as well as Section 11A to which a reference is made in the

case of Rainbow Industries, the show cause notice which must be issued

within the time-frame prescribed in the said provisions must relate to a

period prior thereto as the purpose of the show cause notice is recovery of

duties or charges short-levied etc. We. therefore, find it difficult to

accept the contention that the ratio of the decision in Rainbow Industries

is that under Section 11A past dues cannot be demanded. We must, therefore,

reject that contention. "

Thereafter, the Court held that the decision rendered in Ballarpur

Industries (supra) does not lay down the law correctly and the decision

rendered in Rainbow Industries (supra) on the other hand correctly lays

down the law as it was delivered in context of Rule 173 dealing with

approved price lists and the provisions of Rules 173C and 173B. The Court

also referred to the earlier decision in Collector of Central Excise, New

Delhi v. Bhiwani Textiles Mills, (1966) 88 ELT 639 wherein it was held that

until the proposal for modification of the classification was mooted, the

earlier classification would operate. Relevant discussion (in paragraphs 12

to 15) is as under:-

"12. Rule 173B deals with classification lists. It entitles the proper

officer of Excise to make such inquiry thereon as he deems fit and requires

him to approve the list only thereafter, and that with such modifications

as are considered necessary. The assessee must determine the excise duty

that is payable by him on the goods he intends to remove in accordance with

the approved classification list. Sub-rule (5) provides for modification of

an approved classification list.

13. Rule 10 is a provision for recovery of duties that have not been

levied or paid in full or part. So far as is relevant for our purposes, it

provides that where any duty has been short-levied, the Excise Officer may,

within six months from the relevant date, serve notice on the assesse

requiring him to show cause why he should not pay the amount that had been

short-levied. Rule 10 does not deal with classification lists or relate to

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the re-opening of approved classification lists. That is exclusively

provided for by Rule 173B.

14. The levy of excise 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 challenge that

an approved classification list ceases to be such.

15. 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."

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.

In our view, there is no substance in this submission. As stated earlier,

the relevant amended portion of Section 11A inter alia makes it abundantly

clear that when any duty of excise has been short levied or short paid,

whether or not such short levy or short payment 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 the Act or the

rules, the Central Excise Officer, can without one year from the relevant

date, serve notice on the person chargeable with the duty, which has been

short levied or short paid, requiring him to show cause why he should not

pay the amount specified in the notice. This amendment changes the entire

basis or foundation of the judgment rendered in Cotspun 's case (supra).

The entire discussion in the said case is based upon Rule 173B which dealt

with classification list and that assessee must determine the excise duty

which is payable by him on the goods which he intends to remove in

accordance with approved classification list. The Court based its reasoning

by holding "Rule 10 does not deal with classification list or relate to

reopening of approved classification lists. That is exclusively provided by

Rule 173B." The Court further held that the levy of excise duty on the

basis of approved classification list is not short levy and the

differential duty cannot be recovered on the ground that it is a short levy

and Rule 10 then has no application. After the amendment of law, this

reasoning of the judgment would no longer survive. It is true that the levy

of excise duty on the basis of approved classification list or price-list

or the assessment order is correct levy till such time as the correctness

of the approved classification list or price list or till the assessment

order is set aside. However, with retrospective effect, the legislature has

empowered the Central Excise Officer to set at naught the erroneous

approval of classification list or acceptance of price list or assessment

order. What was provided by Rule 173B is now specifically provided by

Section 11 A. Rule 173B (5) also provided thus:-

"When the dispute about the rate of duty has been finalised or for any

other reasons affecting rate or rates of duty, a modification of the rate

or rates of duty is necessitated, the proper officer shall make such

modification and inform the assessee accordingly."

Now, 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

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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 fs 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 a 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.

Further, learned Attorney General rightly referred to the statement of

objects and reasons in support of the contention that the law is altered so

as to change the entire basis of the judgment rendered in Cotspun's case

(supra). From the statement of objects and reasons, it is abundantly clear

that the main purpose of the amendment was to fill-in the lacuna pointed

out by this Court by interpreting Rule 10 as it existed. As quoted above,

the objects and reasons clearly provide that it was to validate certain

actions taken under Section 11A of the Central Excise Act with

retrospective effect from 17th November, 1980, by providing that

notwithstanding any approval, acceptance or assessment of duty under the

provisions of Central Excise Rules, such show-cause notice could be issued.

It specifically states that the amendment was necessary to overcome certain

judicial pronouncements. Further, validating provision which is clause 110

of the Finance Act also provides to the same effect. Hence, it would be

difficult to accept the contention raised by the learned counsel for the

assessee that amended Section 11A would not be applicable because levy of

excise duty on the basis of approved classification list was the correct

levy. Even in Cotspun's case, the Court has specifically stated that such

levy would be correct levy, at least until such times as the correctness of

the approval is questioned by the issuance to the assessee of a show cause

notice. The entire provision is amended by providing that- whether or not

non-levy or non-payment, short-levy or short-payment or erroneous refund of

excise duty even on the basis of any approval, acceptance or assessment

relating to the rate of duty on or valuation of excisable goods made under

the Act or the Rules, a Central Excise Officer can within one year from the

relevant date serve show-cause 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.

Learned counsel for the assessee pointed out that the assessee would be

placed in a precarious situation because in a genunie case once the

assessee's classification list is approved he would recover the duty from

purchasers on that basis. Thereafter, within one year of the relevant date

a show cause notice is issued stating that such approval of classification

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 willful

statement or suppression of facts.

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

provision of law to ascertain the meaning and intendment of the Legislature

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and in doing so, it should presume that the provision was designed to

effectuate a particular object or to meet a particular requirement. Re:

Firm Amar Nath Basheshar Dass v. Tek Chand, [1972] 1 SCC 893.

This power under Section 11A could be exercised within a period of one year

from the relevant date. Therefore, this power to correct the errors or

mistakes in approval, acceptance or assessment relating to the rate of duty

on or valuation of excisable goods cannot be said to be unreasonable. In

case where first proviso is applicable, by invoking larger period of five

years such show-cause notice could be issued. The relevant date is defined

under sub-section (3) of Section 11A, which is as under-

"11A(3) For the purpose of this section,-

(i) "refund" includes rebate of duty of excise on excisable goods exported

out of India or on excisable materials used in the manufacture of goods are

exported out of India;

(ii) "relevant date" means,-

(a) in the case of excisable goods on which duty of excise has not been

levied or paid or has been short-levied or short paid-

(A) where under the rules made under this Act a periodical return,

showing particulars of the duty paid on the excisable goods removed during

the period to which the said return relates, is to be filed by a

manufacturer or a producer or a licensee of a warehouse, as the case may

be, the date on which such return is so filed;

(B) where no periodical return as aforesaid is filed, the last date on

which such return is to be filed under the said rules;

(C) in any other case, the date on which the duty is to be paid under

this Act or the rules made thereunder.

(b) in a case where duty of excise is provisionally assessed under this

Act or the rules made thereunder, the date of adjustment of duty after the

final assessment thereof;

(c) in the case of excisable goods on which duty of excise has been

erroneously refunded, the date of such refund."

Considering this meaning of the 'relevant date', it is abundantly clear

that in case of excisable goods on which duty of excise has not been levied

or paid or has been short-levied or short-paid, the relevant date is the

date on which periodical return is filed or where no periodical return is

filed, the last 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.

These contentions are exhaustively dealt with in M/s. Ujagar Prints and

Ors. (II) v. Union of India and Ors., [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 factors

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 judgment becomes irrelevant.

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Such legislative expedience of validation of laws is of particular

significance and utility and is quite often applied, in taxing statutes. It

is necessary that the legislature should be able to cure defects in

statutes. No individual can acquire a vested right from a defect in a

statute and seek a windfall from the legislature's mistakes. Validity of

legislations retroactively curing defects in taxing statutes is well

recognised and courts, except under extraordinary circumstances, would be

reluctant to override the legislative judgment as to the need for and

wisdom of the retrospective legislation. In Empire Ind Ltd., this Court

observed-

"...not only because of the paramount governmental interest in obtaining

adequate revenues, but also because taxes are not in the nature of a

penalty or a contractual obligation but rather a means of apportioning the

costs of government amongst those who benefit from it."

In testing whether a retrospective imposition of a tax operates so harshly

as to violate fundamental rights under Article 19(l)(g), the factors

considered relevant include the context in which retroactivity was

contemplated such as whether the law is one of validation of taxing statute

struck down by courts for certain defects; the period of such

retroactivity, and the degree and extent of any unforeseen or unforeseable

financial burden imposed for the past period etc. Having regard to all the

circumstances of the present case, this Court in Empire Ind. Case [1985] 3

SCC 314 held that the retroactivity of the amending provisions was not such

as to incur any infirmity under Article 19(1)(g)."

Further, it is contended that such power is likely to be misused and the

assessee would suffer. In our view, it is erroneous to assume that such

power would be misused or show-cause notice would be issued without any

justifiable basis. In any case, if there is any misuse of power, the Act

provides ample remedy for challenging the same in various forums.

Hence, it is held that in view of the amendment of Section 11-A (1), the

decision rendered by this Court in Cotspun 's case (supra) would not be a

good law. Show cause notice for correcting errors or mistakes in approval,

acceptance or assessment relating to the rate of duty on or valuation of

excisable goods under the provisions of the Act or the Rules made

thereunder could be issued within the prescribed period.

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 classised 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

B.4 No.I/T.I.68/82. as a branch of the main undertaking at Trivandrum.

For the year 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 Excise authorities and duly

approved by the Asstt. Collector of Central Excise, Coimbatore-I Division.

During the year 1986-87 and 1987-88, the Company cleared their goods

availing the exemption in terms of Notification No. 175/86 dated 1.3.1986

(as amended) and submitted their monthly RT 12 returns which were duly

assessed by the Range Superintendent, Coimbatore-I Division and returned to

the Company.

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In October, 1986 and October, 1987, the factory at Coimbatore was visited

by the Central Excise Revenue Audit authorities. On 5.2.1988, the factory

was visited by Central Excise Internal Audit Authorities, Coimbatore.

Thereafter, on 7.12.1989, a show-cause Notice C. No. V/Ch.

8481.80/15/92/89, CxAdj. (CERA) dated 7.12.1989 was issued to the Company

by the Collector, Central Excise, as to why differential duty amounting to

Rs. 7,59,501.28 be not demanded from the Company under Rule 9(2) of the

Central Excise Rules, 1944 read with Section 1IA of the Central Excise &

Salt Act, 1944 and penalty be not imposed on them under Rules 9(2) and 173Q

of the Central Excise Rules, 1944.

On 10.8.1990, the Collector, Central Excise, Coimbatore, by Order-in-

Original C. No.V/Ch.8481.80/15/92/89 dated 10.8.1990 confirmed the demand

of duty of Rs. 7,59,501.28 raised in the show-cause notice, under Rule 9(2)

of the Central Excise Rules, 1944 read with Section 11A of the Central

Excise and Salt Act, 1944 and imposed a penalty of Rs. 10,000 upon the

Company under Rule 9(2) and 173Q of the said Rules.

In appeal, the Tribunal considered whether the extended period of

limitation is invokable for demanding Central Excise Duty under Section 11A

of the Act. The Tribunal considered that as per the Notification No. 175/

86 exemption is available only to a factory which is an undertaking

registered with the Director of Industries and that the factory where the

goods are manufactured and removed should be an undertaking registered with

the Director of Industries before the exemption provided by the

notification could be extended. Therefore, merely because factory of the

Company at Trivandrum was registered as SSI unit, the benefit of

notification was not available in respect of a branch factory at

Coimbatore. The factory at Coimbatore was an independent unit which is

required to be registered as SSI unit with the Director of Industries. The

Tribunal, therefore, 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.

It is settled laws 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 wilful misstatement or suppression of fact or

contravention of any provision is not sufficient to attract the extended

period of limitation.

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 misstatement of suppression of fact for

getting the benefit of exemption notification. Classification list was also

approved on the said assumption without noticing that separate SSI

certificate for factory at Coimbatore was required to be obtained.

In this view of the matter, in our view, the finding recorded by the

Tribunal that there was willful suppression on the part of the Company in

availing the benefit of Notification and therefore extended period of

limitation could be invoked, requires to be set aside and is hereby set

aside.

The appeal is allowed to the aforesaid extent.

C.A. Nos. 3688, 4263, 4767 and 4832-34 of 2000.

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In these appeals, the Tribunal arrived at the conclusion that in two of the

cases, demands were within six months and in one case extended period was

invoked and set aside the order by holding that there was no suppression

and only normal period of six months would be available. However, relying

upon the decision in Cotspun's case. Appeals were allowed. Hence, these

appeals.

Considering the reasons recorded in the aforesaid judgment, the impugned

order passed by the Tribunal holding that the demand in these cases is not

enforceable in view of Cotspun 's case, requires to be set aside and is

hereby set aside.

In the result, the appeals are allowed.

C.A.Nos. 3437-3438 of 2000

We have heard the learned counsel for the parties. It is agreed by the

learned counsel for the parties that the question-whether extended period

of limitation could be invoked in the present case by the Revenue or not-

requires to be re-determined by the Tribunal.

In the result, the appeals are allowed and the matters are remitted to the

Tribunal for deciding the matters in accordance with law.

C.A. Nos. 3553 and 6272 of 2000. CA Nos. 335, 8113-14 and 4249-4250 of

2001.

The appeals were allowed by the Tribunal relying on the decision rendered

by this Court in Cotspun 's case. However, on facts, it is agreed that the

matter requires to be remitted to the Tribunal for deciding the question of

classification and other issues.

In the result, the appeals are partly allowed. The impugned order passed by

the Tribunal is set aside. The Tribunal to decide the contention raised by

the respondents with regard to classification of the goods in question and

other issues, if any.

CA. No. 7090 of 2000

In view of amended Section 11 A, it is agreed by the learned counsel 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

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.

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. CA Nos. 302-303

of 2002

In these appeals, final order No. 83/2000-A dated 18.2.2000 and Misc. Order

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No. 147/2000-A dated 22.12.2000 are challenged.

By order dated 18.2.2000, the Tribunal held that the clearances of the

goods were effected pursuant to the approved classification list and price

list and that being the position, the entire exercise undertaken by the

department in pursuance of the show-cause notice dated 31.3.1986 was

illegal. The Tribunal, therefore, set aside the order passed by the

adjudicating authority and the department was directed to refund the amount

expeditiously. That order was challenged by filing applications to rectify

the mistakes on the ground of subsequent amendment of the statute. The

Tribunal dismissed those applications relying upon the Cotspun's case and

held that the subsequent amendment of statute cannot be a reason for

entertaining a petition for rectification of a mistake.

In view of the interpretation rendered by us with regard to statutory

provisions, these appeals are required to be allowed and the matters are

required to be remitted to the Tribunal for deciding it on merits with

regard to the other contention which are sought to be raised on facts.

In the result, appeals are allowed accordingly and the orders of CEGAT are

set aside. The matters are remitted to the Tribunal for deciding the same

on merits in accordance with law.

There shall be no order as to costs in all these appeals.