ORDER
1. Petitioner, a public limited company, has invoked this Court’s jurisdiction under Art. 226 of the Constitution of India and sought interference in a proceeding sought to be initiated under Section 11A of the Central Excises and Salt Act, 1944, hereinafter referred to as ‘the Act’, pursuant to a Notice No. 47/84, dated 26-6-1984.
2. According to the petitioner there are various types of PVC resins based on differences in raw materials, specification, manufacturing recipe and process, parameters, which the petitioner has been manufacturing. Such products of different grades of resins are denoted by different code numbers. In the said process of manufacturing they have also manufactured resins 103EP, 104EP and 106M since 1967. Prior to 1975, the value of 104EP, a product of the petitioner was fixed under Sec. 4(1)(a) of the Act and with the introduction of Central Excise Valuation Rules in 1975, the value of these products of the petitioner which, he has been captively consuming, was done under Rule 6(b)(ii) of the said Rules. As required under the rules the petitioner submitted a list in the prescribed from before the proper officer for approval and the proper officer determined the rate of duty leviable on the petitioner’s products under the Act. Petitioner in this behalf has stated as follows :
“I state that 104 EP PVC resin is captively used by the petitioner for manufacture of rigid PVC pipes. The procedure prescribed under the Act and Rules have always been strictly complied with in respect of filing of classification list, price list and determination of value. The petitioner, at the instance of the Central Excise Department was determining the value under Rule 6(b)(ii) of the Central Excise Valuation Rules since 1975 onwards and the price list submitted under Rule 174(C) had been approved by the 2nd respondent from 1975 to 1980 after examining all the relevant facts and details. There has been no suppression of any kind.”
“Price list for 104EP was filed on the same basis even after 1980 and the 2nd respondent had accorded provisional approval of the price list for clearance under Rule 9(B) of the Rules for the years 1980/81, 1981/82 and 1982/83.”
“In June, 1981, the 3rd respondent instructed the company that the price list for 104EP and 106M should be filed under Part VI Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975”.
“The 2nd respondent thereafter investigated and enquired into the matter as envisaged under Rule 173(C) and passed orders on 24-11-1983 in respect of the years 1980/81 and 1981/82 and on 6-1-1984 in respect of the year 1982/83 determining the excisable values for 104EP, 106M and 438 under Rule 6(b)(ii) thus complying with the procedure prescribed under Rule 173(C). These orders became final and were not challenged by the Department”.
3. Although according to the petitioner after the acceptance of the price and the value of the goods for the purposes of the duty, the petitioner paid such demands that they were required to pay, the third respondent has issued a show cause notice No. 47/84, dated 26-6-1984 stating that since the PVC pipes and fittings manufactured by the petitioner are supplied to government projects, which are subjected to rigid standards and ISI specification and since the quality of PVC used cannot be inferior when compared to the resin cleared to the other pipe manufacturers as both are used for manufacture of PVC pipes and fittings satisfying the rigid norms of ISI and since the manufacturing process involved for 103EP and 104EP resins upto the stage of polymerisation was one and the same and hence the difference in price structure was not justifiable and therefore, the cost of captively consumed resin should be compared to the resin sold to outsiders. For the above reason the third respondent required the petitioner to show cause why,
“(i) the determination of value of PVC resin captively consumed by the petitioner should not be determined under Rule 6(b)(i) of Central Excise Valuation Rules, 1975”;
“(ii) the provisional assessment of the price list finalised for the years 1980/81, 1981/82, and 1982/83 based on the approval of the 2nd respondent should not be determined under Rule 6(b)(i) of the Central Excise Valuation Rules, 1975;”
“(iii) the differential duty involved as a result of such determination should not be demanded under Section 11(A) of the Central Excise Act”.
4. While the above show cause notice was pending, the third respondent has issued another show-cause notice bearing No. 49 dated 28-6-1984 stating that the petitioner had filed three final price lists in respect of captively consumed resins viz., 104EP, 106M and 438 grade resins for the years 1980-81, 1981-82 and 1982-83 furnishing the relevant year’s cost of production and manufacturing profits for each grade of resin and that the same had been taken on the second respondent’s file and that necessary final approval had been granted under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975. Under this show cause notice, the petitioner was required to show cause to the second respondent as to why for determining the value under Rule 6(b)(ii) of the Rules, the relevant year’s cost of production and gross profit should not be taken into account and the differential duty payable as a result of such determination should not be demanded under Section 11A of the Act.
5. Petitioner, however, has replied to the said notice explaining the difference between the different types of resin and gave details therefor. It has, however, been served with a letter dated 20-3-1985 from the second respondent raising fresh allegations in connection with the show cause notice and stating that there was no reason why the excisable value of 103EP should not be made applicable to 104EP resin also under Rule 6(b)(i) of the Rules. Petitioner has moved this Court and questioned the authority of third respondent as well as that of the second respondent to subject the petitioner to a proceeding under Section 11A of the Act and go accordingly beyond what has already been determined in accordance with the Rules as to the fixation of rate and the price and the value of internally consumed resin by the petitioner for the purpose of imposition of the duty.
6. The Additional Collector of Central Excise, Coimbatore, has sworn to the contents of the counter-affidavit that has been filed on behalf of the respondents and stated in some details how the various basic records of batchwise production of the resin by the petitioner have shown that even if resins with different code numbers were/are for different applications, they were/are required to be valued for comparable goods and the price fixation could not/cannot inhibit the jurisdiction of the assessing authority under Section 11A of the Act if it is found that the duty was either short-levied or short-paid. There is some statement in the counter-affidavit which suggests that the petitioner suppressed the details of cost of construction and assessable value of 104EP resins and that of such numbers that are applied 104EP resins is comparable to 103EP and 104EP M7 in all respects. But the main thrust in this behalf is that the jurisdiction under Section 11A of the Act its comprehensive in the sense that it will take into account all cases of commodity short-levied or short-paid for whatever reason.
7. Learned counsel for the petitioner and learned counsel for the respondents have not quarreled on facts. The former has however, contended that it is not correct to say that the petitioner’s commodity has either been short-levied or short-paid; the latter has disputed the said statement and contended that the action under Section 11A has no concern whatever with the fixation of the value or the price/rate of the goods. Duty paid by the petitioner for the relevant years are found to be one under a wrong determination of the value and the price of the goods and thus, it is a case of short levy which has given rise to the action under Section 11A of the Act. The assessment has not been made finally and has been left open for a reconsideration of the whole matter unaffected by any action taken under other provisions of the Act and Rules framed thereunder.
8. Competing contentions thus on behalf of the petitioner and the respondents respectively give rise to the question whether Section 11A is a provision under which the competent authority can call upon any assessee to make good the alleged loss of revenue on the ground of not levied or short levied or not paid or short paid and demand from the assessee payments thereof on such determinations which conflicted with the determination as to the value of the goods as well as the rate and the price thereof.
9. In Advani Oerlikon Ltd. v. Assistant Collector of Central Excise [1993 (63) E.L.T. 427 (Mad.)], I have considered along with Arumugham, J. how when Modvat credit is claimed, Section 11A of the Act is used and observed after quoting Section 11A as follows :
“It says clearly that when any duty of excise has not been levied or has been short-levied, when any duty of excise has not been paid or has been short-paid, or when any duty of excise has not been 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. A person, who is not found entitled to Modvat credit, as contemplated under Rule 57A of aforementioned, will undoubtly be a person chargeable with the duty and if the requisite duty has not been levied or has not been paid or has been short-levied or short-paid or erroneously refunded, his case will come under Section 11A. A rule to stand the test of validity has to serve the purposes of the Act. The rule making power in Section 37 of the Act says, “The Central Government may make rules to carry into effect the purposes of this Act” and specifies, in particular, and without prejudice to the generality of such matters for which rules can be framed. We have already noticed rules in Section ‘AA’ of the Rules which are framed to prescribed the procedure for availing of the credit of duty paid on the inputs. Rules, when validly framed, become part of the Act and they exist along with other provisions of the Act. Rules in Section ‘AA’ of Chapter V of the Central Excise Rules shall thus have to be read as part of the main Act. They cannot be read as special rules as if that will have independent existence. These rules shall in no way destroy a valuable right of the person chargeable with the duty, recognised under Section 11A of the Act, for a notice to show cause why he should not pay the amount specified in the notice.”
“The omission in Rule 57-I before amendment of any mention of a notice to the manufacturer, the person chargeable to duty to show cause, cannot/could not absolve the respondents of their obligation in terms of Section 11A of the Act to serve a notice upon the petitioners to show cause within the period of limitation prescribed therein. On the above principle, as we find applicable in all fours on the facts of the instant case, we have no hesitation in holding that even while acting under Rule 57-I, as it existed prior to the amendment, the respondents were obliged to issue notice calling upon the petitioners to show cause why they should not be disallowed MODVAT credit on the input and if the credit had already been utilised why the amount, equivalent to such credit, should not be recovered from them, before issuing a written demand, as contemplated under sub-rule (2) thereof”.
“We are thus of the opinion that notwithstanding the rule, which did not contemplate any notice or any period of limitation for the demand, the rule of limitation as found in Section 11A of the Act, has still to be applied to the case of the petitioners. We have come to this conclusion following the rule of strict construction of a taxing statute. It is said in Maxwell on the Interpretation of Statutes 10th Edition, page 284,
“The tendency of modern decisions, upon the whole, is to narrow down materially the difference between what is called a strict and beneficial construction”.
No doubt one has to look merely on what is clearly said in a taxing state. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing has to be read in, nothing has to be implied, one can only look fairly at the language used. (See Cape Brandy Syndicate v. I.R.C. (1921) 1 K.B. 64). Even so the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. To arrive at the real meaning, it is always necessary to get an exact conception of the aim, scope and object of the whole Act. But as pointed out by a Division Bench of the Calcutta High Court in C.I.T. v. Vegetable Products [(1971) 80 ITR 14] and the judgment of the Supreme Court affirming the said Calcutta decision in C.I.T. v. Vegetable Products Ltd. [(1973) 88 ITR 192] and stated in a Full bench decision of Patna High Court in the case of Jamunadas Mannalal v. Commissioner of Income-tax, Bihar [(1985) 152 ITR 261], we have construed the provision of the rules, following.
“when a provision is ambiguous or is capable of two meanings, the construction beneficial to the citizen should be adopted.”
“When we return to the facts of the case to see how the respondents have proceeded in the case, their answer to the violation of the principles of natural justice has already been referred to above. The only notice given to the petitioners is one falling under sub-rule (2) of Rule 57-I, as it existed before 6-10-1988, that notice has to come only after the notice, calling upon the petitioners to show cause why they should not pay the amount, as specified in the notice. The notice calling upon the petitioners to show cause has to conform to the requirements of Section 11A of the Act and thus should be within six months or within five years, as the case may be, depending upon the fact, for which periods of limitation of six months and five years are respectively contemplated. Respondents are persons who are expected to know the law and follow strictly the procedure for realisation of taxes. They are duty-bound to ensure that no one escaped the tax liability, dodged revenue and unfairly benefited himself by not paying the taxes. They are required, however, to act with caution when proceeding to implement the laws, which have far-reaching consequences. They cannot, assume into themselves a finality of the judgment as to the tax liability of certain persons, without informing them of the grounds on which they have come to think that the person concerned had not paid the tax or had short-paid the tax or he had not been levied to tax or had been short-levied. It is only after knowing what is the representation of the person, who is chargeable to tax, in the situations as above, that they should decide to issue demanded notice. Any ex parte decision without affording opportunity of being heard to a tax payer, in the situations of this kind, in our opinion, apart from what is stated in Sec. 11A, shall be hit by the principle of audi alteram partem, one of the three well recognised rules of the principles of natural justice.”
10. We were not concerned in that case with the application of Rule 173-B of the Central Excise Rules, 1944 and the order passed by the Collector under the Act approving the classification of the price list. Section 3 of the Act, which is the charging provision states that there shall be levied and collected in such manner as may be prescribed duties of excise excisable on all goods other than salt which are produced or manufactured in India…….. The manner how the duty shall be levied and collected is prescribed under the Central Excise Rules, 1944, which rules have contemplated for removal of excisable goods on determination of duty by producers, manufacturers or private warehouse licencees under Chapter VII-A thereof. Rule 173-A states that the provisions of this Chapter (VII-A) shall apply to such excisable goods as the Central Government may, by notification in the Official Gazette, specify in this behalf and “where there is a conflict between the provisions of this Chapter and the provisions contained in any other chapter, in relation to such excisable goods, the provisions of this chapter shall prevail”. Rule 173-B introduces a requirement that every assessee shall file with the proper officer for approval a list in such Form as the Collector may direct showing (a) the full description of (i) all excisable goods produced or manufactured by him (ii) all other goods produced or manufactured by him and intended to be removed from his factory, and (iii) all the excisable goods already deposited of likely to be deposited from time to time without payment of duty in his warehouse; (b) the Chapter, Heading No. and Sub-Heading No. if any, of the schedule to the Central Excise Tariff Act, 1985 (5 of 1986) under which each such goods fall; (c) the rate of duty leviable on each such goods; and (d) such other particulars as the Collector may direct. Sub-rule (2) of this rule has contemplated an enquiry by a proper officer and has enjoined the proper officer to approve the list with such modifications as are considered necessary and return one copy of the approved list to the assessee and ordained who (assessee) shall, unless otherwise directed by the proper officer, determine the duty payable on the goods intended to be removed in accordance with such list”. The assessee is commanded under sub-rule (3) of this rule to pay duty under protest at the rate approved by such officer if he disputes the rate of duty approved by him in respect of any goods. Sub-rule (2A), which has been introduced by an amendment in January, 1978, says, that all clearances shall, subject to the provisions of Rule 173CC, be made only after the approval of the list by the proper officer. The proper officer by this sub-rule is empowered to allow the assessee to avail himself of the procedure prescribed under Rule 9B for provisional assessment of the goods, if on account of any enquiry to be made in the matter or for any other reason to be recorded in writing there is likely to be delay in according the approval to the list.
11. Rule 9B gives to the proper officer discretion to make provisional assessment in case (i) an assessee is unable to produce any document or furnish any information necessary for the assessment of duty on any excisable goods; or (ii) he deems it necessary to subject the excisable goods to any chemical or any other test for the purpose of a assessment of duty thereon; or (iii) where an assessee has produced all the necessary documents and furnished full information for the assessment of duty, but he deems it necessary to make further inquiry (including the inquiry to satisfy himself about the due observance of the condition imposed in respect of the goods after the removal) for assessing the duty. These rules as such disclosed; (i) the assessee is required to file with the proper officer for approval a list in the prescribed proforma giving description of the excisable goods produced/manufactured by him, etc. and the rate of duty leviable on each of such goods and the proper officer is required to approve the same after such inquiry as he deems fit. The goods shall be cleared only after the approval of the list by the proper officer; the proper officer, however, can allow the assessee to avail himself of the provisional assessment to duty under Rule 9B. In case there is likelihood of delay in according the approval, in case there is a dispute as to the rate of duty approved by the proper officer, the assessee is given the option to pay the duty under protest. Rule 9B has to be read in such a way that it does not conflict with Rule 173B. The other provisions under Rule 173B comprehensively stipulate (i) if any alteration becomes necessary in the list approved by the proper officer because of the assessee commencing production, manufacturing or warehousing of goods not mentioned in the list or the assessee intended to remove from the factory any non-excisable goods not mentioned in the list or change in the rate/rates of duty in respect of the goods mentioned in the list or by reason of any amendment to the schedule to the Central Excise Tariff Act, 1985 (5 of 1986), a change in the Chapter, Heading No. and sub-heading Number, the assessee is required to file a fresh list or an amendment of the list already filed for the approval of such officer [sub-rule (4)] and 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 [sub-rule (5)….. Sub-rule (6) empowers the Collector to exempt by a general order any class of assessees, who manufacture wholly goods which for the time being, are exempt from paying duty, from filing the list under sub-rule (1). The other relevant Rule 173C requires that every assessee who produces, manufactures or warehouses goods which are chargeable with duty at a rate dependent on the value of the goods, shall file with the proper officer a price list, in such form and in such manner and at such intervals at the Collector may require, showing the price of each of such goods and the trade discount, if any, allowed in respect thereof to the buyers along with such other particulars as the Central Board of Excise and Customs or the Collector may specify. [sub-rule (1)]. Sub-rule (2) states that prior approval by the proper officer of the price-list filed by an assessee under sub-rule (1) shall be necessary only, where the assessee – (i) sells goods to or through a related person as defined in Section 4 of the Act; or (ii) uses such goods for manufacture or production of other goods in his factory, or (iii) clears such goods for free distribution; or (iv) clears such goods in any other manner which does not involve sale to a non-related person or (v) clears the goods of the same kind and quality from his factories located in the jurisdiction of different Collectors of Central Excise or Assistant Collectors of Central Excise or (vi) submits a fresh price-list or an amendment of the price list already filed with the proper officer and which has the effect of lowering the existing value of the goods. sub-rule (3) gives to the proper officer power to approve the price-list after making such modifications as he may consider necessary so as to bring the value shown in the said price-list to the correct value for the purpose of assessment as provided in Sec. 4 of the Act and sub-rule (4) says that in case of assessees other than those specified in sub-rule (2), the duty payable on the goods shall be determined by the assessee himself on the basis of the price-list filed by him, subject to the provisions of sub-rule (6). Sub-rule (6) says that “in respect of assessees other than those specified in sub-rule (2), the assessment of the monthly return filed by such assessee under sub-rule (3) of Rule 173G may be made by the proper office without the need for conveying specific approval to the price-list filed by the assessee. In case the proper officer is of the opinion that on account of any enquiry to be made in the matter or for any other reasons to be recorded in writing, there is likely to be delay in assessment of the monthly return or the declared assessments under such price-list shall be provisional. The assessee shall, in such a case, follow the procedure prescribed under Rule 9B for provisional assessment of the goods. Such assessee shall not remove the goods pending approval of the price-list unless he has executed, within 14 days of the receipt of an order from the proper officer, a bond in proper form for such amount with security or surety, as the proper officer may specify”
12. Petitioner’s case, however, is that the goods manufactured by them are internally used by them for manufacture or production of other goods and thus, according to the petitioner, in their goods the duty payable on the goods is determined by the proper officer and not by them as contemplated under Rule 173-C(4). A Division Bench of the Gujarat High Court in the case of Alembic Glass Industries Ltd. v. Union of India [1992 (59) E.L.T. 207 (Guj.)] has considered the case of an assessee-company and the buyer company having reciprocal interest in the business of each other and thus a case in which the buyer company was found to be a related person and also a favoured buyer. It was a case in which after sale to the related person the assessee contended that the buyer internally consumed the goods and did not resale it. The Court found that the Collector had committed an error in taking into consideration the upward revision of the price and the rise in cost of raw material while arriving at the assessable value of the goods and also that in the case of the assessee there was wilful misstatement and suppression of facts, collusion, etc. and in that background the Gujarat Court has said :
“It was contended that once the price list is approved under the appropriate provisions of the Rule 173C, it becomes final and it cannot be reopened unless the same is set aside in appeal as provided under Section 35E of the Act. Section 11A of the Act provides for recovery of duties not levied and not paid or short levied or short paid or erroneously refunded. The only condition for invoking the provisions of Section 11A of the Act is that there may be non-levy of duty, non-payment of duty, short levy of duty, short payment of duty or erroneous refund of duty. If any of the aforesaid eventuality occurs, the Central Excise Officer would be empowered to issue show cause notice and call upon the assessee to show cause as to why the amount specified in the notice be not recovered from him. In the instant case, short payment of excise duty has been proved. In fact it is not even urged that there was no short payment of excise duty. Once this condition is satisfied, the provisions of Section 11A of the Act can be invoked. If there is no fraud, collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of the Act, the notice may be issued within a period of six months from the relevant date. In case of fraud, collusion or wilful misstatement or suppression, it could be issued within a period of five years from the relevant date. The approval of the price list may be a quasi-judicial function. But that fact does not debar the department from invoking the provisions of Section 11A of the Act. Section 11A of the Act empowers the Excise officer to reopen the assessment in cases where duty may be short levied, short paid, not levied, not paid or erroneously refunded. If the contention of the learned counsel for the petitioner is accepted that the provisions of Section 11A can be resorted to only after the price list has been set aside in appeal or revision, it would amount to rewriting the section. No such fetter on the power of the excise officer is envisaged by the legislature. Therefore, the contention cannot be accepted”. (para 24)
“If the contention that the provision of Section 11A of the Act can be resorted to only after filing appeal under Section 35E of the Act, it would make the provisions of Section 11A and particularly that the proviso thereto unworkable. The proviso can be invoked within the period of five years from the relevant date. While appeal can be filed by the Revenue within the period of one year. If the fraud is detected, say after a period of two years or three years, and if the condition that the appeal is required to be filed under Section 35E before invoking the provisions of Section 11A is sought to be read into the provisions of Section 11A and particularly the proviso thereto could never be implemented. Virtually the proviso to Section 11A would become redundant if the contention advanced by the learned counsel for the petitioner is accepted. There is no reason to adopt such unreasonable construction”. (para 25)
“It may be noted that in relation to classification, once filed and approved by the department, the provisions of Section 11A can be resorted to by the department. This is the view expressed by the Supreme Court in the case of Tata Iron and Steel Company Limited v. Union of India, While considering the question of limitation, the Supreme Court observed that in that case there was no suppression or misstatement of facts or fraud by the assessee and therefore the proviso to Section 11A of the Act would not be attracted. In that view of the matter, the demand was limited to the period of six months prior to the service of the Show Cause Notice. This decision clearly points out that the classification list approved by the department under the provisions of Rule 173B can be reopened by having recourse to the provisions of Section 11A of the Act. The same logic and reasoning will apply to the reopening of assessment even in relation to short levy, short payment, non-levy, non-payment or erroneous refund of excise duty resulting from the approval of price list. In practice, there is no difference between the provisions of Rule 173B which pertain to approval of classifications and Rule 173C which pertain to approval of price list. The only distinction sought to be made out is that in the provisions of Rule 173C the assessee is required to be heard by the department if the price list is to be modified or changed. This is no distinction at all because in all actions or decisions that may be taken by the department and which are likely to adversely affect the assessee, the department would be required to afford an opportunity of being heard to the assessee unless there is an express provision dispensing with the applicability of the principles of natural justice. Thus the decision of the Supreme Court in the case of Tata Iron & Steel Co. Ltd., (supra) which pertains to classification would also apply to the case of reopening of assessment as provided under Section 11A which has its roots in price list”. (para 26)
“It was contended that the Collector could not have invoked the proviso to Section 11A of the Act in as much as there was no fraud or suppression. The contention cannot be accepted. In the instant case, there is, to say the least, well designed misstatement of facts and suppression of facts. The petitioner did not file price list in Part II though prices charged were different to different buyers. This itself was misstatement. That there was upward revision of prices in respect of other small scale buyers except Alembic Chemicals Works Company Limited (sic). In the instant case, Alembic Chemical Works Company Limited was the largest buyer. The goods manufactured by the assessee company was being utilised to the largest extent by Alembic Chemical Works Company Limited. The assessee company and Alembic Chemical Works Company Limited have interest in the business of each other. That though there was upward revision of prices on account of escalation of prices in raw material, the prices were not revised in case of supplies made to Alembic Chemical Works Company Ltd. Had there not been misstatement as regards filling of price list, the department would not have been misled. It also appears that only one Additional Collector during his visit noticed the suppression of facts. As observed in para 27 of the order passed by the Collector other officers did not take care to verify the price aspect. This observation indicates that there was probably collusion also. In view of this position, the contention that the larger period of five years could not have been invoked as no merits”. (para 27)
13. The Delhi High Court in the case of Ajanta Iron and Steel Co. Pvt. Ltd. v. Union of India [1986 (23) E.L.T. 318 (Del.)] has dealt with a case of an assessee who was called upon to show cause why the classification lists specified in the notice be not approved. In that case, the assessee had filed classification lists before two separate Assistant Collectors of Central Excise. The Assistant Collector had held in respect of some goods that they fells under Tariff Items 68 and not under Items 26AA. The assessee appealed and the Appellate Collector held that the goods came under Item 26AA. After stating the history of the case, the court has observed :
“The history of the case, therefore, shows that for earlier periods, out of the four items of Railway Track Material involved, the Assistant Collector had accepted that two of them were to be included under item 26AA but Tie Bars and Cotters were to be included in Item 68. On appeal the Appellate Collector had accepted the petitioner’s contention and held that all the items came under Item 26AA. For the subsequent period the classification list was accepted and approved on this basis by the Assistant Collector, Central Excise, MOD-II So, the question is whether a show cause notice can at all the issued to re-open this question with respect to the same period”. (para 5)
and as a principle of law concluded as follows :
“It was contended by the learned counsel for the respondent and also stated in the affidavit in reply that the approval was given provisionally by the Assistant Collector, Central Excise, MOD-IV. We think that this position is not tenable. The approval had already been given by the Assistant Collector, Mod-II and it was not stated therein that this was provisional. It may be mentioned here also that a provisional assessment is done under Rule 9B which is a different procedure from an approval under Rule 173B. According to Rule 173B, the assessee has to file for approval before the proper officer, a list contained in particular form in accordance with the rule, and that officer may make enquiry and then approve the list. All this has been done earlier by one Assistant Collector and for an earlier period the Assistant Collector had approved only two of the items in the list but on appeal the Appellate Collector had accepted on the assessee’s view point. It, therefore, appears to us that the show cause notice cannot be issued in the present case : (a) because the notice was issued in April, 1984 with regard to a period which commenced in April, 1982 and included periods also commencing in April, 1983. The withdrawal of approval cannot be postponed to years after the event; and (b) once the approval then the classification list becomes an approved list and cannot now be disapproved by another Assistant Collector. We are, therefore, of the view that the notice is not value”. (para 6)
14. The case close to the controversy before me, however is one decided by a Bench of the Patna High Court in the case of Hindustan Malleables and Forgings Ltd. v. Union of India [1992 (58) E.L.T. 516 (Pat.)]. The assessee-company in its petition before the Patna High Court was one engaged in the manufacture of graded gray iron, malleable and S. G. Iron castings which were supplied to many public undertakings. A dispute arose, however, in respect of one of the items manufactured by it, that is, unmachined iron castings. The assessee’s contention was that no excise duty was payable for unmachined iron castings. In terms of the provisions of the Act and the Rules aforementioned, the assessee had submitted classification lists before the appropriate authority and claimed in such lists that unmachined iron castings were falling under Tariff Item No. 25 till 23rd February, 1986, but on and from 1st March, 1986, the heads of classifications had been revised and accordingly in the list unmachined iron castings were classified under Heading No. 7307.10. The Assistant Collector of the Central Excise had approved the said list and found that no duty was payable on it as the duty stood exempted under Notification No. 208/83, dated 1st August, 1983 as amended by Notification No. 38/84, dated 1st March, 1984 and Notification No. 75/76, dated 10th February, 1986. Tariff however was revised and articles of unmachined iron castings were classified under Heading No. 7325.10 for the year 1988-89. This was also approved by the Assistant Collector. A notification dated 20th May, 1988 bearing number 202/88, however, was issued superseding the Notification No. 90/88, dated 1st March, 1988 and the assessee became again entitled to the exemption from payment of excise duty. He accordingly fulfilled all the conditions of duty in respect of the goods manufactured by him and availed the exemption in respect of the unmachined iron castings. The Superintendent of Central Excise, however, insisted that the assessee must submit the classification list afresh and if it was not agreeable to the rate, pay the duty under protest. The assessee moved the Court and under orders of the Court was allowed to clear the goods till appropriate orders were passed by the third respondent, i.e., the Superintendent of Central Excise. Rejecting the assessee’s objections, the Superintendent classified the goods as under the heading or sub-heading of Chapters 84, 85, 86, 87 of the Tariff Act. The assessee moved the Court once again. The Court, however, permitted the assessee to withdraw, the petition in order to enable it to prefer an appeal and directed the respondents in the petition to allow it a period of ten days from that date to clear the goods on the basis of the earlier approved classification list and directed the assessee to keep accounts of goods. The assessee preferred an appeal before the Collector of Central Excise (Appeals). The Collector allowed the appeal and set aside the order passed by the Superintendent. The Collector (Appeals) specifically approved the classification list filed by the assessee classifying the unmachined iron castings as falling under Tariff Heading No. 7325.10 of the Schedule to the Tariff Act. The assessee was then subjected to a notice under Sec. 11A of the Act alleging inter alia that it had contravened the provisions of the rules by failing to pay duties on the unmachined castings manufactured by it. The assessee was called upon to show cause as to why the amount mentioned in the notice should not be demanded from it. It submitted its reply and the matter was heard by the competent authority. In the order that was passed this time under Sec. 11A of the Act, the assessee was not only called upon to pay the duty that according to the respondents he was required to pay and had not paid, but also subjected to penalty. The Patna High Court in its judgment has referred to the judgment of the Delhi High Court in Ajanta Iron & Steel Co. Ltd.’s case [1986 (23) E.L.T. 318 (Del.)] (supra) and the judgment of the Supreme Court in Union of India v. Kamalakshi Finance Corporation Ltd. [1991 (55) E.L.T. 433] and some other judgments and held :
“If the Excise authorities are aggrieved by the order passed by the Collector (Appeals), evidently, it can take recourse to the provisions contained in Section 35B(2) or Section 35E(2, 3 and 4) of the said Act. Even subsequent to the passing of the order of the Collector, it may not approve the classification list submitted by the manufacturer, but so long the order passed by a higher authority is not set aside, reversed or modified, all other Excise authorities are bound by the said order for the period in question. It is now well known that what cannot be done directly cannot be done indirectly. An order which was otherwise binding upon the Excise authorities cannot be permitted to be reopened by initiating a proceeding under Section 11A of the said Act.” (para 24)
“In this view of the matter, it must be held that Respondent No. 2 had no jurisdiction to initiate a proceeding under Section 11A of the Act.” (para 25)
15. The judgment of the Gujarat High Court in the case of Alembic Glass Industries Ltd. [1992 (59) E.L.T. 207 (Guj.)] (supra) and the judgment of the Patna High Court in Hindustan Malleables and Forgings Ltd.; case [1992 (58) E.L.T. 516 (Pat.)] (supra) which appear to conflict with each other, in my view, on the facts that were before the courts respectively, are correctly decided. I have dilated into the issue by referring to the relevant rules exhaustively only to clarify that provisional assessment of the goods under Rule 9B as contemplated for clearance before the list is approved under Rule 173B of the Rules in the circumstances as stated in sub-rule (2A) thereof. In the matter of approval of the price list under Rule 173C, duty is paid before clearance by the assessee on approval of the price list filed by it by the proper officer in the case falling under sub-rule (2) thereof; otherwise on his on was assessment as contemplated under sub-rule (b) thereof. When the various sub-rules of Rule 173C are read together it is not possible to miss the mention in sub-rule (3) thereof, the words, “on receipt of price list under sub-rule (2), the proper officer may approve the price-list…… He shall, thereafter return one copy of the list approved by him to the assessee who shall, unless otherwise directed by the proper officer, determine the duty payable on the goods intended to be removed in accordance with such list” and in sub-rule (4) thereof, “in case of assessee other than those specified in sub-rule (2), the duty payable on the goods shall be determined by the assessee himself on the basis of the price-list filed by him, subject to the provisions of sub-rule (6).
16. It is not the case of the revenue that valuation of excisable goods for the purposes of charging of duty as required under Sec. 4 read with the relevant rules have not been complied with by the petitioner. It is also not the case of the revenue that in the matter of approval of the price-list there was any suppression or fraud by the petitioner. Although there are certain words used in the counter-affidavit to the said effect they do not appear to have any support from any conduct of the petitioner in the matter of enquiry under Rule 173C of the Rules. I have made no prospecting in this case as to the role Section 11A of the Act in a case where the assessee is found to have suppressed material facts and obtained on the basis of incorrect informations, approval of the price-list. Once the rate has been approved and it is not said that there has been any information submitted by the assessee, which information misled the proper authority in determining the rate of duty and identifying the goods under one or the other items of the Schedules to the Tariff Act, it is difficult to accept the stand of the revenue that it has for any reason short-levied duty or that the assessee has short-paid the duty. It is also not possible to accept the case of the revenue for the reasons as above that assessment for the payment of tax in the circumstances as above, are provisional under Rule 9B of the Rules. The reason is obvious. The role of Rule 9B has been limited by sub-rule (2A) of Rule 173B. In any event if any provision of the rules elsewhere and not in Chapter VII-A, appear to conflict with what is found in this Chapter, they are required to be ignored.
17. For the reasons as above, I have found force in the contention of learned counsel for the petitioner. I accordingly hold that the Notice No. 47/84, dated 26-6-1984 and the proceedings allegedly initiated against the petitioner under Sec. 11A of the Act are without jurisdiction. They are accordingly quashed. The writ petition is allowed. On the facts of this case, however, there shall be no order as to costs.