ORDER
G.P. Agarwal, Member (J)
1. This Larger Bench has been constituted to consider the following question :-
“Whether on facts and circumstances, the limitation prescribed under Section 35E(3) of Central Excises and Salt Act should be in accordance with Section 11A”.
2. Shortly put the brief facts leading to the constitution of the Larger Bench to consider the aforesaid question are that the appellants M/s. Asian Paints (India) Limited manufacture Enamels and varnishes. Till 20-12-1978, they were assessed on the basis of invoice value. From 21-12-1978 they switched over to assessment on the basis of manufacturing cost and profit, and claimed assessment on that basis. The Superintendent approved the prices provisionally by his letter dated 20-11-1978. However, this provisional assessment was finalised by the Assistant Collector on the basis of wholesale prices on 18-9-1979. Against that order of the Assistant Collector the appellants filed the appeal. The Collector (Appeals) allowed the appeal and remanded the case to the Assistant Collector for de novo adjudication. On remand a Show Cause Notice dated 2-7-1983 proposing to reject the claims of the appellants made in the price list, namely, (1) the cost of raw-material; (2) the cost of packaging goods; (3) the cost of conversion; and (4) the manufacturing profit. After usual proceedings the Assistant Collector rejected the claims of the appellants and approved the price list. Pursuant to the Order of the Assistant Collector the Superintendent finalised the assessment and issued 54 demands demanding the duty mentioned therein for the period 21-12-1978 to 30-6-1983. However, the appellants filed their appeal against that order of the Assistant Collector before the Collector. The Collector (Appeals) again remanded the matter to the Assistant Collector for re-adjudicating the matter in the light of the judgment of the Supreme Court delivered in the case of Bombay Tyre International. Thereafter the Assistant Collector adjudicated the matter. While adjudicating, he allowed the claims of the appellants for deductions in respect of (1) Additional Trade discount; (2) Regular payment performance discount; (3) Product discount; and (4) Octroi, transit insurance. But rejected the claim of the appellants in respect of cash discount to the extent not actually passed on to the customers, dealers bonus and agency commission by his order dated 15-10-1984. The appellants filed an appeal against that part of the order of the Assistant Collector dated 15-10-1984 whereby their claim, namely, cash discount not actually passed on to the customers, dealers bonus and agency commission was not allowed.
3. Meanwhile, the Collector of Central Excise under Section 35E of the Central Excises and Salt Act, 1944 directed the Assistant Collector to file an appeal against that part of the Assistant Collector dated 15-10-1984 whereby he allowed the claims of the appellants in respect of (1) Additional Trade discount; (2) Regular payment performance discount; (3) Product discount; and (4) Octroi, transit insurance. Accordingly, an appeal was filed on 2-12-1985. This order of Collector of Central Excise directing the Assistant Collector to file the present appeal and thereafter filing of the appeal on 2-12-1985 is the bone of contention before us on the point of limitation.
4. The Collector (Appeals) disposed of the said two appeals, that is to say, appeal filed by the appellants as well as the appeal filed by the Assistant Collector by his common order. The Collector while considering the appeal filed by the appellants held that the Collector was right in not allowing the deductions in respect of actual cash discount not passed on to the customers. He also disallowed the bonus and agency commission. The appellants have now come in appeal before us against that part of the order of the Collector (Appeals) whereby he has disallowed the cash discount to the extent not passed on to the customers and the bonus. The Collector while dealing with the appeal filed by the Assistant Collector set aside the order of the Assistant Collector whereby he allowed the Additional Trade discount; Regular prompt payment discount; Over-riding commission, Special dealers’ discount and Special discount. Against that part of this order of the Collector (Appeals) the appellants have filed the appeal before this Tribunal.
5. During the hearing of these appeals by the Regular Special Bench ‘A’ the main thrust of the arguments by the Ld. counsel for the appellants was that the appeal filed in pursuance of the directions of the Collector (Appeals) under Section 35E of the Act against that part of the order of the Assistant Collector dated 15-10-1984 whereby he has allowed the claims of the appellants, as aforesaid, was barred by limitation, for, the order of the Assistant Collector dated 15-10-1984 resulted in short levy of duty and, therefore, the order proposing to review the order of the Assistant Collector under Section 35E should be passed within six months from the date mentioned under Section 11A of the Act, adding that Section 35E(3) of the Act fixes one year as an outer limit for the purpose of passing an order. In a nutshell his submission before the Special Bench was that any order proposing to review the order resulting in short levy under Section 35E should be in conformity with Section 11A and since in the instant case the order directing the Assistant Collector to file an appeal was passed by the Collector on 11-10-1985, it was barred by limitation and, therefore, is liable to be set aside. The case was also argued on merits. After hearing both sides both the Ld. Members on the Bench agreed that they are of the view that Section 11A cannot be read in Section 35E(3) and, therefore, they are of the view that the appeal filed by the Assistant Collector in pursuance of the directions of the Collector (Appeals) against order dated 15-10-1984 was not time barred. However, the Ld. Members on the Bench before passing a final verdict on this issue thought it advisable that the matter should be considered by the Larger Bench since according to them they were expressing a view which is in conflict with the earlier views expressed in the following cases :-
(1) Collector of Central Excise v. Universal Radiators Ltd. – 1988 (37) ELT 222;
(2) Shree Digvijay Cement Co. Ltd. v. Collector of Central Excise -1991 (52) ELT 631; and
(3) Re-Rolling Mills v. Collector of Central Excise -1989 (43) ELT 115.
6. Arguing on behalf of the appellants the Ld. Sr. Counsel Shri A.N. Setalvad duly assisted by the Sr. Counsel Shri D.B. Engineer and Shri N.H. Seervai and Miss P.P. Bhandari, Advocates while reiterating the said submissions, which were made before the Special Bench ‘A’, elaborated that on 15-10-1984 the Assistant Collector passed the order allowing some deductions as claimed by the assessee and rejected the others. Accordingly the assessment were finalised and duly adjusted on 31-3-1985. Against that part of the Assistant Collector’s order dated 15-10-1984 allowing some deductions, the Collector of Central Excise under Section 35E(2) directed the Assistant Collector to file an appeal vide his order dated 11-10-1985 and consequently the appeal was filed by the Assistant Collector before the Collector (Appeals) on 2-12-1985 in pursuance of the said directions. He submitted that since the order under Sub-section (2) of Section 35E directing the Assistant Collector to file the appeal was passed after the expiry of six months as provided under Section 11A of the Act (since in the instant case no question of wilful suppression of facts etc. is involved), it was barred by time because the limitation of one year prescribed for passing such order by the Collector under Sub-section (3) of Section 35E is an outer limit, hence Section 11A comes into play as Section 35E(3) is to be read along with Section 11A otherwise Section 11A would become redundant. And further that since the question of short levy arises out of the order of the Assistant Collector dated 15-10-1984, the appeal should have been filed within six months from the date of the order of the Assistant Collector. Continuing further he submitted that Section 11A of the Act is the specific and the only provision applicable when there has been a short levy or where any duty has been erroneously refunded. It (Section 11 A) applies to all cases wherein asses-see has received duty etc. to which he was not entitled in law as held in the case of Zenith Tin Works (P) Ltd. v. Union of India and Ors., 1986 (23) ELT 357 (Bom.) and Premier Tyres Limited v. Collector of Central Excise, Cochin, 1986 (26) ELT 42 -a case dealing with the wrong availment of duty. Collector of Customs & Central Excise v. Modern Induction & Alloys Limited, 1990 (49) ELT 495; Collector of Customs & Central Excise v. Jawandmal Dhannamal, 1990 (49) ELT 541 and Mahindra & Mahindra Ltd. v. Collector of Central Excise, 1989 (44) ELT 669. He also cited the case of Bawa Potteries, Mehrauli v. Union of India and Anr., 1981 (8) ELT 114 (Del.) to show that erroneous refund under quasi-judicial order would also fall under the ambit of Section 11A. Vehemently, emphasising his submissions he further contended that it is settled law that if a statute contains two provisions they must be harmoniously construed, and if there is one which is a special provision dealing with a certain matter, that matter is excluded from the ambit of the general provision, (see Gadde Venkateswara Rao v. Gout, of Andhra Pradesh and Ors., AIR 1966 SC 828) and Sub-sections (2) and (3) of Section 35E are general provisions which empowers an examination of all orders passed by the subordinates which may or may not involve a case of short-levy or erroneous refund of duty, e.g., wrong classification. In this premises, he tried to define the scope and ambit of Section 11A and Sub-section (3) of Section 35E of the Act by submitting that Section 11A is the specific provision involving only short levy and refund attracting the limitation of six months whereas general orders passed by the subordinates could be examined within the one year period as specified under Sub-section (3) of Section 35E. To support his contention he tried to draw the analogy from the provisions of the Customs Act and submitted that where the general provision contains longer time limit the shorter time limit laid down under a specific provision, is attracted and cited the case of S. Venkatesan and Anr. v. Nihalchand Agarivala and Ors., AIR 1962 Calcutta 258 wherein according to the Ld. Counsel the Calcutta High Court held that the shorter time limit laid down in Section 39 of the erstwhile Sea Customs Act, 1878 applies being a specific provision dealing with the refund and this decision is binding on the Tribunal, [see Sai Giridhara Supply Co. v. Collector of Central Excise, Bombay, 1987 (28) ELT 438 and Collector of Central Excise, Bangalore v. United Glass and Ors., 1987 (31) ELT 786].
He further submitted that this argument of his also finds support from the entire legislative history of the review provisions made under Section 36(2) as it stood prior to the enactment of Section 35E of the Act, under reference, and the law should be interpreted in accordance with this legislative history (see R.S. Nayak v. A.R. Antulay, AIR 1984 SC 684). In this backdrop he submitted that the cases of Collector of Central Excise v. Universal Radiators Limited, supra, Shree Digvijay Cement Company Limited v. Collector of Central Excise, supra, and the Collector of Customs v. Perm Alloys Corporation Limited, 1992 (52) ELT 633 were correctly decided and the contra views expressed by the Tribunal in the case of Collector of Central Excise, Bangalore v. Raman Boards Limited, 1985 (22) ELT 892 and Andhra Sugars Limited v. Collector of Central Excise, 1991 (55) ELT 262 were wrongly decided as these cases ignore the basic issues, namely, that Section 35E(2) is a general provision whereas Section 11A is a specific and reliance placed upon Section 35A(3) was misconceived. He also cited the case of Corn Products Company (I) Limited and Ors. v. Union of India and Ors., 1984 (16) ELT 177 (Bom.); Collector of Central Excise v. Fedders Llyod Corporation Ltd., New Delhi, 1994 (70) E.L.T. 352 (Tri.); Motilal & Company, Thane v. Collector of Central Excise, Bombay, 1984 (15) ELT 157; Military Dairy Farm, Kirkee v. Collector of Central Excise, Pune, 1985 (19) ELT 148; and Kirloskar Cummins Limited v. Collector of Central Excise, 1988 (37) ELT 219 to show that though the specific statutory provisions were different the general discussion in all these cases supports his contention. In reply, Shri A.K. Singhal, Ld. JDR submitted that since the assessments were provisional, the question of limitation would not arise. Alternatively, he submitted that Section 35E does not fall within the purview of Section 11A as proposal to examine the order is on account of allowing certain deductions. An order under Section 35E(2) could be passed where the Collector is satisfied that the order passed by the subordinate executive authority is not legal or proper. Therefore, the provisions of Section 11A or the limitation mentioned therein cannot be planted in Section 35E when there is a specific provision of limitation in Sub-section (3) of the same Section (35E) otherwise Sub-section (3) of Section 35E would become redundant. In a nutshell his submission was that the limitation prescribed under Section 35E and 11A are independent and have no co-relation with each other and relied upon the case of Collector of Central Excise, Bangalore v. Raman Boards Limited, supra and Andhra Sugars Ltd. v. Collector of Central Excise, supra. Regarding the case law cited by the Ld. counsel for the appellants he submitted that all these cases arise out of the refund cases and not with the case of short-levy or non-levy. He stressed that short-levy or non-levy should be with reference to original demand and not a case of short-levy or non-levy arising out of order of the Assistant Collector. Where the demand is reduced, it does not result in short-levy. He emphasised that as a result of the order of the Assistant Collector dated 15-10-1984 against which an appeal was filed before the Collector (Appeals) in pursuance of the directions of the Collector of Central Excise under Sub-section (2) of Section 35E no short-levy has resulted. In other words his submission was that only the legality and propriety on a part of the order which allowed certain deductions was examined and challenged.
7. During the hearing the judgment of the Apex Court rendered in the case of Triveni Sheet Glass Works Ltd. v. Collector of Central Excise, Allahabad and Ors., dated 6-11-1990 [since reported in 1993 (67) ELT 210 (SC)] also came to our notice and, therefore, we apprised both sides of this judgment.
8. We have considered the rival contentions raised by the parties.
9. The first and foremost question before us is, as to whether the present case is a case of short levy of excise duty, since it was contended by the learned counsel for the appellants that the question of short levy arises out of the order of the Assistant Collector dated 15-10-1984. To decide this question, it would be advantageous to state the admitted facts on the record, which are as follows :-
(i) that the appellants submitted their price lists which were assessed provisionally and the appellants started clearance of goods covered by the provisional approval against B-13 bonds duly backed by bank guarantee;
(ii) that after the several rounds of litigation the said provisional list was finalised by the Assistant Collector of Central Excise vide his Order-in-Original No. V(Misc.)14/Cell/80/8522 dated 24-8-1983 and as a result thereof 54 demands demanding differential duty were issued to the appellants.
(iii) that meanwhile the appellants challenged the said order-in-original dated 24-8-1983 before the Collector of Central Excise (Appeals) who vide his order-in-appeal dated 27-2-1984 remanded the case for de novo adjudication;
(iv) that on remand the Assistant Collector vide his order-in-original dated 15-10-1984 allowed the claim of the appellants in respect of (i) additional trade discount; (ii) regular payment performance discount; (iii) product discount; (iv) octroi; and (v) transit insurance, but rejected the claim of the appellants with respect to certain deductions as detailed out in paragraph 2 above.
(v) that against that part of the order of the Assistant Collector dated 15-10-1984 whereby he rejected the claims of the appellants, the appellants filed their appeal on 7-1-1985 and also started paying differential duty under protest in instalments; and
(vi) that the Collector of Central Excise also directed the Assistant Collector to file the appeal against that part of the adjudication order dated 15-10-1984 of the Assistant Collector whereby he allowed the claims of the appellants as aforesaid under Section 35E of the Act before the Collector (Appeals) vide his order dated 11-10-1985. Accordingly, the appeal was filed by the Assistant Collector before the Collector (Appeals) on 2-12-1985.
10. Rule 173C of Central Excise Rules, 1944 provides for the filing of price list by the assessee. Rule 173CC of the Central Excise Rules, 1944 provides for the provisional assessment and expressly states that an assessee may, after he has filed the list or, as the case may be, the revised list, and pending approval of such list by the proper officer, remove such goods, on payment of duty on the basis declared in the list or, as the case may be, the revised list, and thereupon the duty paid on such goods shall be deemed to be the duty assessed provisionally under Rule 9B. Rule 9B of the Rules makes provision for provisional assessment. Its Sub-section (5) provides that “when the duty leviable on the goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of, or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be”.
11. Now turn to Section 11A of Central Excises and Salt Act, 1944 which provides that “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.” For the purpose of this Section “relevant date” means – 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 as per Sub-section (3)(ii)(b).
12. In other words the ‘relevant date’ from which the period of limitation is to be computed in the case of excisable goods on which the value or the rate of duty has been provisionally determined under the Rules, is to be the date on which the duty is to be adjusted after final determination of the value for the purpose of Section 11A or Rule 9B. In the instant case the contention of the Ld. counsel for the appellants is that, since the Assistant Collector has allowed the claim of the appellants in respect of (i) additional trade discount; (ii) regular payment performance discount; (iii) product discount; (iv) octroi; and (v) transit insurance his order dated 15-10-1984 has resulted in a short levy of duty and, therefore, the order authorising the Assistant Collector to file the appeal before the Collector (Appeals) under Section 35E(2) should have been passed within six months from the relevant date as mentioned in Section 11A of the Act. According to Ld. counsel “relevant date” is the date when the order was passed by the Assistant Collector on 15-10-1984 or in the alternative 31-3-1985 when the entire differential duty was paid in instalments though, under protest, whereas the case of the Department is that Section 11A did not come into play at all either at the time when the appeal was filed before the Collector (Appeals) on 7-1-1985 by the appellants or differential duty was paid by the appellants in instalments (last instalment being paid on 31-3-1985 or when the order-in-appeal was passed by the Collector (Appeals) since the assessment was provisional and appeal was filed by the Department against that part of the Assistant Collector dated 15-10-1984 which allowed certain deductions as claimed by the assessee. In other words, the submission of the Ld. JDR Shri A.K. Singhal was that the question of short levy would arise only when the duty is adjusted after the final assessment thereof as provided in Sub-section (3)(ii)(b) of Section 11A. Therefore, the question which arise for our consideration is “what is the relevant date in the instant case” and whether it has arisen on the passing of the adjudication order by the Assistant Collector on 15-10-1984 or alternatively on the payment of the differential duty finally on 31-3-1985 as contended by the appellants.
13. From the facts as stated above it is clear that after the passing of the adjudication order by the Assistant Collector on 15-10-1984 the appellants paid differential duty under protest in instalments. The last instalment was paid on 31-3-1985. Rule 233B of the Central Excise Rules, 1944 provides for the payment of duty under protest. There is no pre-condition of any demand for payment of duty under protest. In the case of ICEM Engineering Co. P. Ltd. v. CCE, 1989 (44) E.L.T. 744 it was held by this Tribunal that Rule 233B(1) gives liberty to the assessee the choice to pay the duty under protest by the use of the word ‘desire’ in Sub-section (1). There is no pre-condition of any demand for payment of duty under protest. In the case of Indian Tool Manufacturers, Bombay v. CCE, Bombay, 1984 (18) E.L.T. 622 it was held by this Tribunal that when duty is paid under protest the assessment remains alive. In the case of Metroark Private Ltd. v. CCE, 1990 (50) E.L.T. 133, it was held by the Tribunal that where the duty is paid under protest, the protest continues till dispute is finally settled, in these circumstances, payment of the duty under protest cannot be taken as the relevant date because the relevant date in the case of provisional assessment is the date of the adjustment of duty after the final assessment thereof. In the instant case, though the provisional assessment has been finalised by the Assistant Collector vide his adjudication order dated 15-10-1984, it was challenged before the Collector (Appeals), and is still before this Tribunal and the duty has not been adjusted. The contention of the appellants that they have paid the duty under protest as per the adjudication order dated 15-10-1984 and the Supdt. vide his letter dated 11-7-1985 has certified that the revised amount has been paid, and therefore, it should be treated as the relevant date overlooks the fact that the duty was paid under protest and such payment of differential duty cannot by any stretch of imagination be termed as adjustment of duty after the final assessment thereof because the payment of duty under protest keeps the assessment alive and the protest continues till the dispute is finally settled, as stated above, and everything is in the fluid state. To be more explicit, it may be stated that Rule 233(B) provides for the payment of duty under protest even where the remedy of an appeal or revision is not available to the assessee [sub-rule (5)]. It also provides that where the remedy of an appeal or revision is available the assessee may file an appeal or revision and can also pay the duty under protest [sub-rules (6) & (7)]. In the instant case, as aforesaid, the appellants after the passing of the adjudication order dated 15-10-1984 started paying the duty under protest, even after the filing of the appeal against the said order of the Assistant Collector before the Collector (Appeals) and continues to do so during the pendency of the appeal. Thus, in the teeth of these circumstances could it be said that after the finalisation of the provisional list the duty was adjusted under Rule 9B or the cause of action (relevant date) accrued as defined in Sub-section (3)(ii)(b) of Section 11A of the Act? Our answer would be in emphatic ‘No’. Now take the converse. The appellants have admittedly paid the duty as per the final assessment done by the Assistant Collector vide his adjudication order dated 15-10-1984. They have paid the said duty under protest and also filed the appeal before the Collector (Appeals) and lost. Now they have filed the present appeal and suppose if they succeed here and file the refund claim, could it be said in that case that under Section 11B their claim would be time-barred, if counted from the relevant date, that is to say, the date of the payment of their duty? Our answer would be again in the emphatic ‘No’. Because when the duty is paid under protest, the question of limitation for claiming the refund would not arise. And further that the Section 11A has not come into play as the cause of action (relevant date) has not accrued or arisen so far. It would arise only when the duty would be adjusted when the dispute relating to the final assessment is settled in the present appeal or by the Apex Court if the matter is further taken up in Appeal.
14. On these findings, the question referred to the Larger Bench can be answered in the emphatic ‘No’ only on the sole ground and any other discussion would be of an academic nature because from the question referred to the Larger Bench, it is clear that, this Bench has to confine itself only to the facts and circumstances of the present case while dealing with the question of Section 11A prescribing the limitation for raising the demand.
15. In view of this it is not necessary here to consider whether the cases Re-Rolling Mills v. CCE, 1989 (43) E.L.T. 115; CCE v. Universal Radiators Ltd., 1988 (37) E.L.T. 222, and Shree Digvijay Cement Co. Ltd. v. CCE, 1991 (52) E.L.T. 631 as cited by the Ld. Counsel for the appellants or the case of CCE, Bangalore v. Raman Boards Limited, 1985 (22) E.L.T. 892 and Andhra Sugars Ltd. v. CCE, 1991 (55) E.L.T. 262 as cited by JDR were rightly decided or not. Since all these cases relate to the alleged erroneous refund for which the relevant date under Section 11A of the Act is quite different whereas the present case is the case of finalisation of provisional assessment for which there is a different relevant date. And it seems to us that these cases are clearly distinguishable on facts as well as on the language used therein. As detailed out by both the Learned Members of the referring Bench in their referring order. For ready reference the same may be reproduced as under :-
S.V. Maruthi
“25. The question is whether the ratio laid down by the above Orders is correct and whether it can be extended to the facts of this case. In the present case, the Show Cause Notice was issued demanding duty by disallowing the deductions claimed in the price lists by the appellants. The Show Cause Notice is dated 2-7-1983. The said Show Cause Notice was adjudicated upon and the Assistant Collector by his Order dated 15-10-1984 accepted certain deductions and rejected certain deductions claimed by the appellants. As against that part of the order of the Assistant Collector allowing deductions, the appeal was filed beyond the period of six months but within the period of one year. The main contention of the appellants is that the appeal should have been filed within 6 months from the date of the Order of the Assistant Collector.
26. In this context, we may refer to Section 11A which reads as follows :-
“Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded :- (1) When any duty or 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…”
27. The relevant date for the purpose of Section 11A is the date on which the monthly return is to be filed or the last date on which the said return is to be filed where no monthly return is filed, in any other case the date on which the duty is paid. In other words, in a case where duty is short-levied or short-paid Show Cause Notice is to be issued either from the date on which the return is to be filed, if no return is filed the date on which the said return is to be filed or on the date of payment of duty.
28. On the facts of this case, it is clear that the appellants have filed the price lists. The price lists were approved by allowing certain deductions.
29. The Order approving the price lists is appealable. The price list is appealable. The Department can either file an appeal against the order of the Assistant Collector or initiate Review proceedings under Section 35E(3). Since the Assistant has not filed the appeal under Section 35A the only remedy open is to invoke the provision under Section 35E(2). That is exactly what has been done in this case. In other words, the Order of the Assistant Collector approving the price lists by allowing certain deductions was challenged by the Department by way of appeal under Section 35E of the Act. Two questions arise under the above circumstances :- (1) Whether the order of the Assistant Collector has resulted in short-levy of duty in respect of the price lists approved by allowing certain deductions; (2) If so, whether the period of limitation is in accordance with Section HA and applicable to Section 35E of the Act.
30. The original Show Cause Notice is a proposal to approve the price lists by disallowing deductions. On consideration of reply, the Assistant Collector while approving the price lists allowed certain deductions claimed by the appellants which resulted in short levy of duty. In our view, the original show cause notice itself is a proposal to disallow deductions and recover duty as a consequence. In other words, it is a proposal to recover duty short levied as a result of claiming deductions. The fact that the Assistant Collector allowed deductions claimed as a consideration of the reply does not alter the nature of the Show Cause Notice issued originally.
31. We may also examine the issue from another point of view. As pointed out earlier, the Assistant Collector merely approved the price lists by allowing certain deductions. The Order of the Assistant Collector approving the price lists is subject to an order that may be passed under Section 35E. In other words, it is not a final order, since it is subject to an order which may be passed under Section 35E, the order that may be passed under Section 35E is in the nature of an appeal/revision. Therefore, the period of limitation prescribed under Section 35E(3) is, the period of limitation for purpose of filing an appeal/revision against the Order of the Assistant Collector. Hence, the period prescribed under Section 35E is different from the period prescribed under Section 11A namely, it is one year. Consequently, in our view the period prescribed under Section 35E is the period for the purpose of reviewing the order of the Assistant Collector approving the price lists.
32. We may take an analogy from the Limitation Act. A suit for recovery of money due on Promissory Note is to be filed within 3 years when the Note falls due. The period of limitation for the purpose of recovery of debt under the Promissory Note is 3 years from the relevant date i.e., when it falls due. In case either party is aggrieved by the decree that may be passed by the Court, they can file an appeal to the Superior Court. The period of limitation for the purpose of filing the appeal is 3 months under the Limitation Act. The reasons for pointing out the above illustration is that the period of 3 years is provided under the Limitation Act for the enforcement of the original causes of action whereas 3 months period is provided for the purpose of filing an appeal against the decree of the Court. Distinction between two is obvious.
33. Similarly, Section 11A provides for the enforcement of original demands. In other words, it provides the period of limitation for recovery of duty non-levied, short levied or erroneously refunded. Short levy may arise as a result of allowing deductions erroneously while approving the price list. On the facts of this case, the Show Cause Notice was already issued under Section 11A which is a composite show cause notice proposing to approve the price list after rejecting the deductions. In other words, proceedings to recover duty short-levied as a consequence of disallowing deduction has already been commenced. The filing of appeal/revision under Section 35E in continuation of the original proceedings. Therefore, at that stage, invoking Section 11A on the ground that the order of the Assistant Collector resulted in short-levy or non-levy appears to be in consistent. As pointed out earlier, in this case, the original Show Cause Notice was already issued under Section 11A proposing to disallow the deductions claimed by the appellants and also proposing to recover the duty. In other words, the machinery under Section 11A has already been set in motion and the Assistant Collector rightly or wrongly approved the price lists by allowing certain deductions against which the Department proposed to file an appeal/revision and the only remedy available is through Section 35E. Therefore, the period of limitation provided under Section 35E(3) is the period of limitation for the purpose of filing the appeal/revision and as stated earlier, the appeal is in continuation of original proceedings, namely, the proceedings initiated by issue of Show Cause Notice under Section 11A proposing to disallow the deductions. The period of limitation for the purpose of filing of appeal against an order is different from the period of limitation provided for the purpose of enforcement of original cause of action. Therefore, we are of the view that Section 11A cannot be read in Section 35E(3).
34. We may point out another anomaly. If we read Section 11A in Section 35E(3), Section 11A provides 6 months period for the purpose of recovering the duty short-levied non-levied or duty erroneously refunded. Under the proviso to Section 11A, the period of 6 months has been enlarged to 5 years. Under Section 35E(3) the period of limitation for the purpose of filing of an appeal is one year plus three months. If we read Section 11A in Section 35E then the period of one year will be reduced to 6 months in cases where it is covered by Section 11A(1) and gets enlarged to 5 years in cases where it is covered by the proviso. We cannot amend Section 35E(3) by reducing the period of limitation provided under Section 35E(3) or enlarge the period of limitation provided under Section 35E(3).
35. For the reasons mentioned above, we are of the view that Section 11A cannot be read in Section 35E(3). Therefore, we are of the view that the appeal filed is within time.”
P.C. Jain
38. While I agree with the learned sister that the aforesaid question be referred to the Larger Bench inasmuch as if it is answered in favour of the appellant the matter in respect of demand on additional trade discount and regular prompt payment discount against allowing of which the Assistant Collector filed an application under Section 35E of the Act before the Collector (Appeals) would be time barred, I would like to add the following in support of the view that limitation under Section 11A cannot be read in Section 35E:
38.1 The argument that Section 11A would become redundant if limitation of this Section is not read into Section 35E in respect of orders resulting in non-payment or short payment of duty or erroneous refund, is not correct. Section 11A and Section 35E are in different areas. Section 11A enables an Assistant Collector to determine the amount of duty not levied, short-levied etc. by following the procedure set out in Section 11A and thereafter collect such non-levy, short-levy etc. so determined. It is the initial act of determination of non-levy, short-levy etc. power’ for which has been specially conferred on the Assistant Collector. An adjudication order is required to be passed in accordance with law by the Assistant Collector. Section 35E, on the other hand, gives the power to superior authorities under the Act, namely Collector of Central Excise or the Central Board of Excise & Customs, as the case may be, to examine the legality or propriety of such order passed by the lower officer or the Collector respectively. If such superior is not satisfied about the legality or propriety of such an order then it may direct the adjudicating authority or any other authorised officer to make an application to the Appellate Tribunal or Collector (Appeals) for determination of such points as may arise out of such adjudication order in the view of such superior authority. In short, powers under Section 35E are given to the two highest superior authorities of the department of Central Excise to have a watch over the adjudication orders or the orders-in-original passed by an officer of Central Excise. This appears to be necessary in the scheme of Central Excises and Salt Act. Under the provisions of this Act, there is no provision for an automaticor routine first appeal by the department against the orders of an adjudicating authority e.g. if an adjudicating authority is upto the level of the Additional Collector only, an assessee has the right of appeal to the Collector (Appeals) but the department does not have any right of a routine appeal by the department to the Collector (Appeals). Similarly, against the orders passed by the Collector as an adjudicating authority, there is no provision for an appeal to the Appellate Tribunal. Yet there may be cases where the adjudicating authorities might have acted, in passing their orders, with illegality or impropriety and perhaps against the Revenue. It is to take care of such adjudication orders that powers have been vested under Section 35E in the Board or the Collector of Central Excise. A separate time limit within which the Board and the Collector of Central Excise can act has also been laid down in Section 35E. Two Sections 35E and 11A in my view serve different purposes and act in different areas and do not conflict with one another. No conflict in the two sections should be read calling for harmonisation.
39. Apart from the foregoing, the aforesaid view is also supported by the legislative history of powers of revision vested in the Board or the Collector which in brief is set out below :-
39.1 Prior to introduction of Chapter VIA relating to ‘appeals’ by Finance (2) Act, 1980 (13 of 1980) Section 35A provided for revision of an adjudication order passed by the Collector of Central Excise or any lower officer by the Board or Collector respectively on the grounds of incorrect illegality and impropriety. Similarly Section 36 conferred the powers of revision on Central Government of any order in appeal passed under Section 35 or Section 35A, as they stood before the Finance Act 13 of 1980 on the same grounds of incorrectness, illegality or impropriety. Section 35A and Section 36, as they stood immediately before enforcement of the provision of Chapter VIA introduced by Act 13 of 1980 are reproduced below :-
“35A. Revision by Board or Collector. – (1) The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), (hereinafter referred to as the Board), may, of its own motion or otherwise, call for and examine the record of any proceeding in which any decision or order has been passed under this Act or the rules made thereunder by a Collector of Central Excise (not being a decision or order passed on appeal under Section 35) for the purpose of satisfying itself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as he thinks fit.
(2) The Collector of Central Excise may, of his own motion or otherwise, call for and examine the record of any proceedings in which any decision or order has been passed under this Act or the rules made thereunder by a Central Excise Officer subordinate to him (not being a decision or order passed on appeal under Section 35) for the purpose of satisfying himself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as he thinks fit.
(3)(a) No decision or order under this section shall be varied so as to prejudicially affect any person unless such person is given a reasonable opportunity of making a representation and, if he so desires, of being heard in his defence.
(b) Where the Board or, as the case may be, the Collector of Central Excise is of opinion that any duty of excise has not been levied or has been short-levied or erroneously refunded, no other leying or enhancing the duty, or no order requiring payment of the duty so refunded, shall be made under this section unless the person affected by the proposed order is given notice to show cause against it within the time limit specified in Section 11 A.
(4) No proceedings shall be commenced under this section in respect of any decision or order [Whether such decision or order has been passed before or after the commencement of the Customs, Central Excises and Salt and Central Boards of Revenue (Amendment) Act, 1978] after the expiration of a period of one year from the date of such decision or order.
36. Revision by Central Government. – (1) The Central Government may on the application of any person aggrieved by any decision or order passed under this Act or the rules made thereunder by any Central Excise Officer or by the (Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963) and from which no appeal lies, reverse or modify such decision or order.
(1A) Every application under Sub-section (1) shall be accompanied by a fee of rupees one hundred and twenty-five.
(2) The Central Government may, of its own motion or otherwise, call for and examine the record of any proceeding in which any decision or order has been passed under Section 35 or Section 35A of this Act for the purpose of satisfying itself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as it thinks fit:
Provided that no decision or order shall be varied so as to prejudicially affect any person unless such person is given a reasonable opportunity of making a representation and, if he so desires, of being heard in his defence:
Provided further that no proceedings shall be commenced under this sub-section in respect of any decision or order (whether such decision or order has been passed before or after the coming into force of this sub-section) after the expiration of a period of one year from the date of such decision or order :
Provided also that where the Central Government is of opinion that any duty of excise has not been levied or has been short-levied or erroneously refunded, no order levying or enhancing the duty, or no order requiring payment of duty so refunded, shall be made under this section unless the person affected by the proposed order is given notice to show cause against it within the time limit specified in Section 11 A.”
It would be observed from clause (b) of Section 35A(3) and 3rd proviso to Section 36(2) that time limits, as specified in Section 11A was introduced with reference to revision of orders resulting in non-levy, short-levy or erroneous refund. Chapter VIA which brings, inter alia, Section 35E into force, apart from changing the forum for revision of orders i.e. Appellate Tribunal in place of Central Government and the Board, or Collector (Appeals) in place of Collector of Central Excise, also deleted the time limits, as specified in Section 11 A, as mentioned above. In view of this deletion of reference to time limits specified in Section 11A in the new provisions of Section 35E, I am of the opinion that legislature has deliberately intended to do away with the time limits of Section 11A with reference to such revision of adjudication orders. We must respect such clear legislative intent.”
16. Before we part it may be stated for the record that in the case of Triveni Sheet Glass Works Ltd. v. Collector of Central Excise supra, a show cause notice dated 6-5-1981 was issued by the Superintendent under Section 11A of the Act alleging that clearances upto 30-6-1980 had suffered short levy of excise duty to the assessee therein. On receipt the assessee submitted an explanation and after considering it the Assistant Collector dropped the proceedings by an order dated 17-6-1981. However, on 22-5-1982 the Collector of Central Excise issued show cause notice to the assessee therein under Section 35A of the Act proposing to revise and set aside the order of the Assistant Collector and proposing to confirm the demand of duty allegedly evaded by the assessee, as detailed out in the notice of the Supdt. dated 6-5-1981. Challenging this notice of the Collector of Central Excise dated 22-5-1982 a writ petition was filed in the Allahabad High Court by the assessee which was dismissed. Thereafter the Special Leave Petition was filed before the Apex Court wherein it was contended that the notice dated 22-5-1982 issued by the Collector of Central Excise was barred by time under Section 35A(3)(b) of the Act and the reliance was placed by the assessee on the cases of Associated Cement Companies v. Union, 1981 (8) E.L.T. 421, Corn Products (India) Ltd. v. Union, 1984 (16) E.L.T. 77 and Mahindra Re-Rolls v. Union, 1988 (33) E.L.T 684. Reference was also made to certain decision of the Tribunal. While dealing with these arguments the Apex Court also observed that:
“Reference has been made to some decisions of the Tribunal, Special Leave Petitions from some of which have been granted or dismissed by this Court. The three High Courts decisions cited were cases under Section 36(2) of the Act the provisions of which seems to correspond to Section 35A presently under consideration. It is not necessary for us to consider whether the provisions of Section 36(2) and Section 35A are in pan materia on this aspect or enter into detailed discussion of the reasoning and conclusion in those cases. For, it seems to us that those cases are clearly distinguishable…It is not necessary here to consider whether those cases were rightly decided or not.”
17. From these observations it is clear that the Apex Court has left the question open even where the show cause notice was issued for short levy at the first instance by the Superintendent but dropped by the Assistant Collector and thereafter the Collector of Central Excise issued show cause notice to the assessee under Section 35A of the Act proposing to revise and set aside the order of the Assistant Collector and proposing to confirm the demand of duty allegedly evaded by the assessee as detailed out in the notice of Superintendent, whereas the present case as stated above is the case of finalisation of the provisional list.
18. In the result, the question referred to the Larger Bench is answered in the emphatic ‘No’ and it is held that on the facts and circumstances the limitation prescribed under Section 35E of Central Excises and Salt Act, 1944 should not be in accordance with Section 11A.
Sd/- Sd/-
(G.P. Agarwal) (Harish Chander)
Member (J) President
Sd/- Sd/-
(K.S. Venkataramani) (P.C. Jain)
Dated : 4-3-1994 Member (T) Member (J)
ORDER
S.K. Bhatnagar, Vice President
19. While I agree with the proposed conclusion to the effect that the limitation prescribed under Section 35E is independent of that provided in Section 11A, I am unable to agree with some of the extracts mentioned in the proposed order and would like to observe as follows :-
20. In my opinion while dealing with a case under Section 35E, we are not concerned with the nature or type of proceedings which took place before or during adjudication at the original level. This is for the simple reason that Section 35E takes over from where the proceedings under Section 11A or 33 end, and/is clearly concerned with an arena distinct from that of original proceedings.
21. The arena is distinguishable in as much as the level at which, the purpose for which, and the manner in which, the matter is required to be examined, after the adjudication order has been passed, are different. Thus, for instance under Section 35E(2) it is the Collector in whom a discretion has been vested to call for the records and examine whether the impugned order was legal or proper and if not whether appeal should be filed before the appropriate authority and if so on what grounds and it is for these purposes that time of one year has been allowed to him from the date of adjudication order passed by the adjudicating authority subordinate to him.
22. Since Section 35E(3) clearly and explicitly mentions one year; therefore, in my opinion a mention of the time limit as “one year plus three months” is factually incorrect and to that extent I am unable to concur with the referring Bench’s observations reproduced in the Larger Bench Order as well.
23. In so far as Section 11A is concerned, the period of time – normal as well as extended – which has been provided for issuing a Show Cause Notice obviously relates to the period prior to the decision or order passed under that section or adjudication, whereas Section 35E is concerned with post adjudication Steps. A reference to assessee’s representation which must be considered before taking decision under Section 11A and to the date of adjudication order, in; Section 35.E is a significant pointer in this regard. Hence, in my opinion, irrespective of whether the demand was raised before or after ‘6’ months (or even after one year but before five years for the matter), at the earlier stage, the Collector would still have one year’s time from the date of adjudication order to exercise the powers vested under Section 35E(2).
24. Again, while I agree that the assessment remains provisional till it is not finalised by the competent authority, I am unable to agree with the observations implying that if a payment is made after the assessment has been finalised by way of an adjudication or appellate order and such payment is made under ‘protest’, the case would once again revert to or acquire a provisional character because there is no provision for such a revival or restoration under Rule 9B or otherwise. Rule 9B deals only with the provisional actions prior to final assessment or adjudication and the Sections for appeal or revision do not prescribe any such course. Rule 233B does not deal with the assessment per se and merely lays down the procedure to be followed in cases in which the duty is paid under protest. In fact this Rule only makes it clear that “in cases where the remedy of an appeal or revision is available to the assessee against an order or decision which necessitated him to deposit the duty under protest, he may file an appeal or revision within the period specified for filing such appeal or revision as the case may be” (Clause 6).
It also mentions inter alia, that “on service of the decision on the representation referred to in Sub-rule 5 or of the appeal or revision referred in Sub-rule 5, the assessee shall have no right to deposit the duty under protest…”.
In other words, the above rules including Rule 233B do not in any way affect the time limit prescribed under Section 35E(3) the main issue before us. Even otherwise a provision under the Act must prevail over the rules.
25. Looking at it in a slightly different way, it is noteworthy that under the Central Excises and Salt Act the orders of the adjudicating authority are final subject only to the provisions for appeal and revision. This finality can be touched only by way of an order of the competent authority and not otherwise. And Sections 35 and 35E provide the mechanism for approaching that authority and prescribes time limit for doing so and this time limit under Section 35E runs from the date of adjudication order and we are only concerned with it. Nothing else matters.
26. I am also unable to agree with the observations at Para 29 with reference to the so-called option available to the Department. In my opinion Section 35 is not intended to provide remedy to the Department and the only course open to it is to take recourse to Section 35E under the Act. However, in the matter before us, we are concerned at this stage mainly with interpretation and application of Section 35E and Section 11A; Hence, mere was no need to labour this point further, but it was necessary to make this observation en passant before parting.