ORDER
D.C. Mandal, Member (J)
1. In this appeal, which was originally filed as a Revision Application before the Additional Secretary (Revision Application), Ministry of Finance (Department of Revenue), the appellants challenged the orders of the lower authorities on grounds of merit as well as on limitation. The facts of the case, in brief, are that the appellants were manufacturers of Super Masonry Cement. This product was sold by them through their sole selling agent M/s Bharat Overseas Private Limited and sub-agents M/s Mukui Trading Private Limited and Rajeev Trading Private Limited. The goods were assessed at the ad-valorem rate of duty on the declared price of Rs. 292/- per M.T. (including packing charges of. Rs. 52/- per M.T.). On scrutiny of the sale vouchers issued by the sole selling agents and sub-agents, the department found that the handling charges varying from Rs. 10/- to Rs. 20/- per M.T. were recovered from the customers and the sale tax was also paid on the said handling charges. As these charges were not declared in the price list, on 2-11-1976 the Superintendent of Central Excise issued a demand show cause notice for Rs. 3,65,616.79 under Rule 10A of the Central Excise Rules, 1944, in respect of cement cleared during the period from October, 1974 to September, 1975. The demand was confirmed by the Assistant Collector of Central Excise by his order dated 7-5-1979. An appeal was, thereafter, filed before the Appellate Collector of Central Excise, New Delhi, challenging the order of the Assistant Collector, but the same was also rejected.
2. When the matter came up for hearing before us, Shri P.N. Dixit, Assistant Commercial Officer of M/s Jaipur Udyog Limited appeared for the appellants and Shri S. Krishnamurthy, S.D.R. appeared for the respondent. Shri Dixit stated that in view of the judgment of the Hon’ble Supreme Court in the case of Bombay Tyres International Limited reported in 1983 ELT 1896 (SC) and the CEGAT Larger Bench decision in the case of Atma Steel Limited reported in 1984 (17) ELT 331 the appellants would not contest the orders of the lower authorities on merits, but would contest the same on ground of limitation. Thus, Shri Dixit, appearing for the appellants, gave up the ground of appeal on merits, but argued on the point of limitation only. He argued that the demand for duty was issued under Rule 10A of the Central Excise Rules, 1944, but the said rule was not applicable in the present case. He argued that Rule 10 of the Central Excise Rules was applicable to this case and according to Rule 10 the period of limitation was three months. The demand was issued after the expiry of one year from the date of payment of duty and as such, the demand notice was time-barred. Shri Dixit further argued that handling charges were recovered by sole selling agent and the sub-agents without the knowledge of the appellants. The amount of handling charges were not passed on to the appellants. Shri Dixit also argued that Rule 10A was abolished before the demand notice was confirmed by the Assistant Collector of Central Excise. After abolition of the Rule 10-A, the proceedings could not be continued and as such, the order of the Assistant Collector was bad in law. In support of his contention, Shri Dixit relied upon the judgment of Supreme Court in the case of R. K. Audim v. Special Steel Limited (AIR 1971 SC 2049) and in the case of N.B. Sanjana v. Ephinstone Spg. & Wvg. Mills Co. Ltd. (1971 AIR SC 2039). Shri Dixit also relied on this Tribunal’s order No. 523/84-B dated 22-6-1984 in the case of Hoist-O-Mech Limited, Thane v. Collector of Central Excise, Bombay, reported in 1984 (18) ELT 442.
3. Shri Krishnamurthy, departmental representative argued that the appellants did not declare handling charges in the price list. It was found out by the department on scrutiny of the sale vouchers of the agents. The appellants, therefore, suppressed the facts of recovery of handling charges. The demand notice was, therefore, correctly issued under Rule 10-A of the Central Excise Rules. There was no time limit for raising the demand for duty under Rule 10-A. Rule 10 of the Central Excise Rules was not applicable in the present case.
4. We have considered the arguments of both sides The points to be decided by us are:
(i) Whether there has been suppression of facts on the part of the appellants by not declaring the handling charges in the price list;
(ii) Whether Rule 10 or, Rule 10-A is applicable in the present case; and
(iii) Whether the demand could be confirmed under Rule 10-A after the rule was deleted from the statute.
5. Regarding first question, we find that there was an agency agreement between the appellants and their sole selling agent M/s Bharat Overseas Private Limited. The relevant paragraphs of the agreement are re-produced below:
“(2)That the ex-works and/or F.O.R. destination prices (exclusive of Sales Tax and other local taxes) of cement manufacture by the manufacturer and the terms and conditions on which the cement has to be sold shall from time to time be advised by the Manufacturer to the agent and all cement manufactured by the Manufacturer and covered by this Agreement shall be sold by the Agent on behalf of the Manufacturer at the price and on terms of business as may be communicated by the Manufacturer from time to time.
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(4) That subject to such directions, if any, as the manufacturer may issue from time to time, the agent may appoint sub-agents, stockists and dealers as it may consider necessary for the proper distribution of cement.
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(8) That all payments for cement sold in terms of this Agreement shall be collected by the Agent on behalf of the Manufacturer and shall be disbursed in such manner as may be required by the Manufacturer from time to time.
(9) That the Agent shall be responsible to collect state or Interstate Sales Tax and other local and State Government taxes as may be leviable from time to time from persons to whom cement is sold on behalf of the Manufacturer and pay the same to the Government concerned in accordance with law. They shall also discharge all liabilities devolving upon them as “Dealers” and/or “Sole Selling Agents” under various Sales Tax Act and rules. The manufacturer will not be liable to reimburse to the Agent any amount paid or incurred by the Agent by way of Sales Tax or other local taxes.
(10) That the manufacturer will be entitled through its authorised representatives to inspect and check the stocks and relevant records held by the Agent or its sub-agents, stockists and dealers and the Agent shall give to such representatives all reasonable facilities for this purpose.
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(12) That the Agent shall keep and maintain books of accounts and records in regard to the sale and despatch of cement and shall furnish to the Manufacturer or any of its nominee such returns, statements and accounts and information relating to the sale and despatch of cement in terms of this agreement in such manner as may be required by the Manufacturer from time to time.
xxxx xxxx (14) That the Agent would be remunerated for its work as sole selling agent by payment of sole selling Agency Commission (?) Rs. 1.25 per tonne of cement sold on behalf of the manufacturer by the Agent."
6. We find from the agency agreement that the agents were selling the cement on behalf of the manufacturer at the price and terms of business as might be communicated by the manufacturer to the agents from time to time. All payments of cement sold in terms of the said agreement were collected by the agent on behalf of the manufacturer and those were to be disbursed in such manner as might be required by the manufacturer from time to time. As per the agreement, the manufacturer was entitled to inspect the stock and relevant records maintained by the agent. The agents were to keep and maintain the books of accounts and records in respect of sale and despatch of cement and were to furnish to the manufacturer such returns, statements of accounts and any other information regarding sale and despatch of cement as might be required by the manufacturer. The appellants had, therefore, full control over the sale of cements by the agent.
7. Under Section 4(4)(a) of the Central Excises and Salt Act, 1944, an assessee includes his agents. In view of the agency agreement read with the above provision of Section 4 of the Act, the appellants were responsible for action of their agents and sub-agents. The appellants were, therefore, liable to declare the handling charges recovered from the customers by their agents and sub-agents. In view of the full control of the appellants on the agents by virtue of agency agreement, it -is difficult for us to accept the contention of the appellants that they were not aware of the recovery of handling charges by the agents. In the circumstances, we are to accept the respondents’ contention that the appellants suppressed the handling charges from the department by not declaring it in the price list. The recovery of handling charges were detected by the department on their own in the course of scrutiny of the sale vouchers of the agents.
8. Rule 10 and 10-A of the Central Excise Rules, 1944 as they existed prior to 6th August, 1977, were as follows:
“10. Recovery of duties or charges short-levied or erroneously re-funded:
(1) When duties or charges have been short-levied through in-advertance, error, collusion, or mis-construction on the part of an officer, or through mis-statement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied has been owing to any such cause, erroneously refunded, the proper officer may, within three months from the date on which the duty or charge was paid or adjusted in the owner’s account-current, if any, or from the date of making the refund, serve a notice on the person from whom such deficiency in duty or charges is or are recoverable requiring him to show cause to the Assistant Collector of Central Excise why he should not pay the amount specified in the notice.
(2) The Assistant Collector of Central Excise, after considering the representation, if any, made by the person on whom notice is served under Sub-rule (1), shall determine the amount of duty or charges due from such persons (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined within ten days from the date on which he is required to pay such amount or within such extended period as the Assistant Collector of Central Excise may, in any particular case, allow.
“10-A Residuary powers for recovery of sums due to Government.
(1) Where these Rules do not make any specific provision for the collection of any duty, or of any deficiency in duty if the duty has for any reason been short-levied, or of any other sum of any kind payable to the Central Government under the Act or these Rules, the proper officer may serve a notice on the person from whom such duty, deficiency in duty or sum is recoverable requiring him to show cause to the Assistant Collector of Central Excise why he should not pay the amount specified in the notice.
(2) The Assistant Collector of Central Excise, after considering the representation, if any, made by the person on whom notice is served under sub-rule (1), shall determine the amount of’ duty, deficiency in duty or sum due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined within ten days from the date on which he is required to pay such amount or within such extended period as the Assistant Collector of Central Excise may, in any particular case allow.”
9. It was held by the Hon’ble Supreme Court in the case of Andhra Rerolling Works, Hyderabad, v. Union of India and Ors. decided on 5-5-1986 and reported in 1986 (25) ELT 3 (SC), that Rule 10 applies to cases of short-levy through inadvertence, error, collusion or mis-construction on the part of the officer or through mis-statement as to quantity, description or value of the excisable goods on the part of the owner. In short, it pre-supposes. the assessment which could be re-opened on specified ground within specified period. On the other hand, rule 10-A, which was a residuary clause, applies to those cases which were not covered by Rule 10 and so invokable without any limitation. Similar view was held by the Supreme Court in the case of D.R. Kohli and Ors. v. Atul Products Ltd, decided on 12-12-1985 and reported in 1985 (20) ELT 212 (SC). It was also held in that case that whereas, under Rule 10 deficiency could not be recovered after the expiry of three months from the date on which the duty or charge was paid or adjusted in the owner’s account-current or from the date of making the refund, Rule 10-A did not contain any such period of limitation.
10. We have already held that there was suppression of handling charges on the part of the appellants. Rule 10 of Central Excise Rules is applicable in the circumstances specified therein, viz., inadvertence, error, collusion or mis-construction on the part of the officer or mis-statement, as to the quantity, description or value of the excisable goods on the part of the assessee. None of these circumstances exists in the present case. On the other hand, there was suppression of fact on the part of the appellants. Short-levy due to suppression of fact is not covered by Rule 10. Such short-levy is covered by Rule 10-A of the Central Excise Rules since this residuary rule is applicable to cases where Rule 10 cannot be applied. Superintendent of Central Excise, therefore, correctly issued the demand notice in this case under Rule 10-A. There is no time-limit for raising demand for duty under this Rule. In the result, the demand for duty is not hit by limitation in the present case.
11. The third point of paragraph 4 (supra) is covered by the decision of this Tribunal in the case of Atma Steels Private Limited v. Collector of Central Excise, Chandigarh and Ors. reported in 1984 (17) ELT 331. This is a decision of the Larger Bench of this Tribunal. It was held therein by this Tribunal that the proceedings initiated with reference to rule or provision validly subsisting at the time of initiation of proceedings can continue in spite of repeal or substitution of original provisions. It was held that pending proceedings under Rule 10-A of Central Excise Rules could continue irrespective of the fact that the said rule was subsequently removed from the relevant provisions. We respectfully follow the decision of the Larger Bench and hold that in the present case the Assistant Collector could confirm the demand after Rule 10-A was deleted from the Central Excise Rules, 1944.
12. Shri Dixit cited two judgments of the Supreme Court in support of his contention. We find that the facts in those two cases were different from the present one and as such, those two judgments are not applicable to the present case before us. In the case of R.K. Audim v. Special Steel Ltd, (supra) short-Jevy was due to misapprehension of the department and as such, it was held by the Supreme Court that the short-levy was covered by Rule 10 and not 10-A. In the present case, short-levy is not due to misapprehension. In the case of N.B. Sanjana v. Elphinstone Spg. & Wvg. Mills Co. Ltd, (supra), the short-levy was in the circumstances specified under Rule 10 of the Central Excise Rules and hence, it was held by the Supreme Court that Rule 10-A could not be applied. As already held by us, the short-levy in the present case was due to suppression of facts and this was not covered by Rule 10. Consequently, Rule 10-A was correctly applied. Shri Dixit also relied upon this Tribunal’s order reported in 1984 (18) ELT 442. In the case covered by that order, there was no suppression of facts on the part of the appellants and hence, the Tribunal held that Rule 10 was applicable, whereas in the present case there was suppression of facts and accordingly, Rule 10-A was to be applied. The- decision in the earlier cases cannot, therefore, be followed by us as the facts are different.
13. In view of the above discussions, we find no merit in the appeal under consideration before us and consequently, the same is dismissed.