ORDER
G.A. Brahma Deva, Member (J)
1. These two appeals are filed by the Department. Since the issues are common in both the cases, they are, therefore, clubbed together and are being disposed of by this common order.
2. Facts of the case, in brief, are that Ferro Alloys Corporation Ltd., the respondents, owns a 100% Export Oriented Undertaking at Randia in the State of Orissa. At the said 100% E.O.U., the respondents manufacture charge chrome and export the same from their Plant. They had imported capital goods raw materials and components under a duty free Scheme envisaged by Notification No. 13/81 dated 9-2-1981 which exempted capital goods raw materials and components imported by the unit. In accordance with the 100% E.O.U. Scheme, entire plant at Randia was declared as a Warehousing Station by the Government of India by issuing an appropriate Notification Under Section 9 of the Customs Act. The entire factory premises of the Company was licensed as a private bonded Warehouse in accordance with the relevant provisions of the Customs Act, 1962 and/or the 100% E.O..U. Scheme. The imports made by the respondents, i.e., capital goods components/spares etc. during the period from October 1981 – Dec. 1983 at the Ports at Vishakhapatnam and Calcutta were duly assessed by the Customs Authorities by allowing the exemption under the said Notification No. 13/81-Cus. Subsequently, it was alleged by the Department that these spares brought and warehoused at the Port bonded Warehouse at charge Chrome Plant Randia are not eligible to avail exemption under Notification No. 13/81-Cus., dated 9-2-1981. It was pointed out by the department that prior to 19-3-1984, when Notification No. 86/84-Cus., dated 19-3-1984 was issued amending Notification No. 13/81-Cus., dated 9-2-1981 only capital goods raw materials and components were eligible to get exemption under Notification No. 13/81-Cus. The spares imported by the factory relate to the period prior to 19-3-1984, i.e., before the inclusion of spares in the original Notification No. 13/81-Cus., dated 9-2-1981. Accordingly, show cause notice was issued dated 31-10-1985 for the recovery of duty amounting to Rs. 45,29,974.61 alleging that there has been a short levy of duty in respect of the spares imported by the Company during the period from October, 1981 to December, 1983 in appeal No. C/2116/89-B.
3. In Appeal No. C/2117/89-B.2 Show Cause Notices was issued for the recovery of duty amounting to Rs. 26,87,565.10 on the ground that duty was leviable on imported spares for dozer shovel on the plea that amended provision permits only spares of production machinery and that Dozer Shovel is not a production machinery.
4. Both the show cause notices were duly answered by the respondents denying the charges and disputed the allegations made in the show cause notices, inter alia, that said exemption was lawfully and correctly allowed in respect of the goods imported by the Company; that the said notice invoking the larger period of limitation in any event was barred by limitation. Apart from these contentions, it was submitted that dozer shovels are essential production machinery at the said Plant and, as such, exemption cannot denied on spares of dozer shovels in reply to the show cause notice in Appeal No. 2117/89-B.
5. The Assistant Collector of Customs & Central Excise, Cuttack who adjudicated the proceedings rejected the contentions of the respondents and confirmed the above demands. In Appeal before the Collector of Customs (Appeals), Collector (Appeals) held that if the goods are liable to duty, such duty can be levied only at the time of de-bonding of the Warehouse or clearance of the goods for home consumption whereas in this case, the goods in question have not yet been cleared from the Warehouse. He observed that the duty was being demanded with reference to the date of original importation, the demand was prima facie barred by time. It was further held that the intention of the Government was all along to grant exemption even in respect of the spares of capital goods imported by 100% E.O.U. As regards dozer shovels in second appeal he observed that they are obviously being used in the production process within the plant. They are not being taken out from such Warehouse. Without such dozer shovels production will not be possible in the Plant, as such, import of such Shovels will be covered by Notification No. 13/81-Cus. With these observations, the matter was remanded to the original authority with a direction to re-examine the whole issue in greater depth and if necessary, in consultation with the higher authorities. Aggrieved by the said impugned orders, the Department has come before us by way of these two appeals.
6. Shri S.K. Roy, learned S.D.R. for the Revenue justified the action of the Department in raising the demand. He said that ‘Spares’ were not included in the Notification No. 13/81-Cus. but they were included by amended Notification No. 86/84 dated 19-3-1984. The spares were imported by the respondents prior to 19-3-1984 and they were not eligible for exemption. There was a mistake on the part of the Department in allowing the exemption at the time of importation and subsequently demand was raised as there was a short levy at the time of importation. He said that the demand is not barred by time since the goods were under bond. As regards importation of spares of Dozer Shovels in Appeal No. C/2117/89, he submitted that during the material time ‘spare’ of production machinery was exempted under Notification No. 13/81-Cus., dated 9-2-1981 as amended by Notification No. 121/84-Cus., dated 3-5-1984. He contended that ‘Dozer Shovel’ is not a production machinery but a material handling equipment and this material equipment/Dozer Shovel was not specifically exempted under amended Notification, the party was not entitled to the benefit of the said Notification.
7. Arguing for the respondents Shri S.K. Bagaria, learned Advocate raised a number of issues.
(i) Exemption under Notification No. 13/81-Cus. having been allowed by the Customs authorities at Calcutta and Vishakhapatnam, the Superintendent and/or the Assistant Collector having jurisdiction over the Company’s Factory had no authority whatsoever to deny the said exemption or to initiate any proceedings for this purpose. He said that after considering the facts and circumstances, the Customs authorities at the said Ports allowed the exemption under Notification No. 13/81-Cus. and assessed the Bills of entry accordingly. The Superintendent or Assistant Collector in Orissa has no jurisdiction to go into and decide the correctness of the orders passed on the bills of entry by the appropriate Custom authorities at Calcutta and Vishakhapatnam. He cited a series of decisions of the CEGAT in support of his contention.
(ii) The proceedings initiated by the Superintendent by issuing the said show cause notice were barred by limitation. He said that the entire facts were looked into and considered at the time of assessing the bills of entry as regards imports of the said goods. Even the Assistant Collector of Central Excise, Vishakhapatnam had initiated similar proceedings on August 30, 1983 and after being fully satisfied in the matter, dropped the proceeding initiated by the said notice by order dated December 12, 1983. Neither there was suppression of facts nor was alleged in the said show cause notice dated 31-10-1985 and, accordingly, entire demand was barred by time since the demand related to a period prior to six months of the said notice. He referred to the number of decision on this time barring issue.
(iii) The proceedings initiated by the Superintendent/Assistant Collector were/or in any event premature and without jurisdiction. He said that admittedly the goods in question were allowed to be warehoused by the Customs Authority at Calcutta and Vishakhapatnam in accordance with 100% E.O.U. Scheme. Bills of entry for warehousing were duly assessed and the goods were allowed to be removed to the Warehouse and entire Plant at Randia was declared as a Warehousing station under 100% E.O.U. Scheme. In respect of warehoused goods Under Section 68 of Customs Act, the duty becomes leviable only if the bill of entry for home consumption is filed and is assessed if the goods are intended to be cleared for home consumption. So long as the goods continued to remain in the warehouse, there is no question of any duty being levied or demanded in respect of such goods.
(iv) Next he contended that even on merits the exemption under Notification No. 13/81-Cus. is clearly available in respect of the goods in question. He said that in the instant case none of the goods in question were removed from the Warehouse as entire Plant was a Warehouse and in respect of the Warehouse goods duty is payable only at the time of home consumption and at the rates in force at the time of actual removal from the Warehouse. Further, it was submitted that under 100% E.O.U. Scheme it was specifically provided that the import of capital goods, components, raw materials, spares shall be exempt from duties. The expression capital goods is wide enough to include even those capital goods or parts thereof which were required for replacement purposes.
8. In addition to the above contentions, he also said that dozer shovel is a production machinery with reference to Notification No. 13/81-Cus. in respect of the additional issue in Appeal No. 2117/89-B. He said that all such machineries used in or in relation to the process of manufacture would be production machinery. The role of machinery in question and its function in relation to production process was explained by him as given in reply to the Show Cause Notice. Accordingly, at factory about 150 M.T. of charged chrome is manufactured every day. For this purpose an average of 600 M.T. of chrome Ore/Chrome concentrated Briquettes and other raw materials are required to be put in the manufacturing process everyday. The charged chrome is tapped in molten stage from the furnace at a high temperature of about 1200°C. This red hot molten material is required to be subjected to subsequent processes such as casting, cooling, chilling, sizing, screening etc. It is only after these operations that the fully manufactured and marketable commodity named Charge Chrome comes into existence. The red hot molten slag which is almost an equal quantity of charged chrome is tapped from the furnace in molten state of high temperature is required to be immediately removed. It is impossible to carry on the aforesaid operations in the course of manufacture of Charge Chrome without the help of Dozer Shovels and the employment of dozer shovel is essential and imperative to handle the huge quantity of raw materials for production purpose. He also filed certificates given by (i) Bharat Earth Movers Ltd., a Government of India Undertaking; (ii) Mr. Bijoy Kumar Mohapatra, Chartered Engineer, Bhubaneswar and (iii) Mr. M.H.R. Rao, Ex. Director (Technical), Bharat Gold Mines Ltd., Bangalore, wherein it was stated that dozer shovel is an essential and integral part of the production machinery and it is not possible to carry out the manufacturing activity without employing dozer shovel in the said manufacturing operations. He said though the main function of the dozer shovel is carrying hot metals and move the materials, it cannot be treated as material handling equipment but play a very important part in process of manufacture. This dozer shovel cannot be treated at par with other material handling equipments such as fork lift Trucks, Lifts, Escalators, Conveyors etc. That is why both in the Customs Tariff as well as in the Central Excise Tariff a distinction has been maintained by classifying these two items under different head. For instance, in the Customs Tariff 1986-87 material handling equipments were classified under Heading Nos. 84.27, 84.28 etc. and on the other hand shovels were classified under Heading No. 84.29. Similarly in the Excise Tariff 1986-87 they were classified under different heads as different products. To a query from the Bench whether there has been distinction between manufacture and production, he said that this issue was considered by the Supreme Court in the case of Collector v. Rajan Chemical Works, reported in 1991 (55) E.L.T. 444 but without going into that issue, this point can be considered in favour of the party taking into the fact that this machinery was used directly in connection with the production and, as such, spares imported for the said production machinery are entitled to the exemption granted under the said Notification No. 13/81-Cus.
9. In reply Sri S.K. Roy contended that demand is not premature as entire aspect in respect of 100% E.O.U. was completely covered and manufacturing activity was controlled by the provisions of Notification No. 13/81-Cus. which itself is a self contained Scheme. He said that factory cannot be considered to be a private bonded warehouse and provisions relating to Warehousing under Chapter IX of the Customs Act are not applicable to this case. He said that order passed by the Assistant Collector does not suffer for want of jurisdiction as the Assistant Collector who is having jurisdiction over the Company’s factory in Orissa is empowered to decide the issue of exemption with reference to the said Notification. As regards Dozer Shovel, he contended that it is not a production machinery but it is only a material handling equipment. The function of Dozer Shovel is only to carry the materials and respondents themselves accepted that it is a material handling equipment. During the material period some of the material handling equipments such as Fork lifts, overhead cranes, mobile cranes, crawler cranes, hoists and stackers were exempted under Amended Notification No. 13/81-Cus. but not Dozer Shovel. He said that machinery which transforms material into finished product can be considered as production machinery for the purpose of the said Notification and not the material equipment which takes part in supplying the material in the manufacturing activity.
10. We have carefully considered the arguments advanced on both sides and perused the record. We find that under the provisions of the Customs Act, the imported goods are assessable to duty both at the time of warehousing and removal of goods for home consumption from the Warehouse. Section 17 of the Act provides for making assessment of the imported goods before they are warehoused. On facts, in this case, the consignments imported by the respondent Company and the Bills of entry for warehousing filed in respect thereof were also duly assessed by the Custom authorities by allowing the exemption under the said Notification No. 13/81-Cus. If at all any mistake has taken place at the time of assessment before warehousing either in not levying the duty or short levied that can be recovered by issuing Show Cause-cum-Demand Notice within six months in the normal course by the proper Officer or by the Collector within 5 years from the relevant date on the ground of wilful misstatement or suppression of facts. ‘Relevant date’ as explained in Section 28(3) of the Customs Act is relevant and is reproduced as under :-
“28(3). For the purposes of Sub-section (1), the expression “relevant date” means :-
(a) in a case where duty is not levied, the date on which the proper officer makes an order for the clearance of the goods;
(b) in a case where duty is provisionally assessed Under Section 18, the date of adjustment of duty after the final assessment thereof;
(c) in a case where duty has been erroneously refunded, the date of refund;
(d) in any other case, the date of payment of duty.
If the date of importation or assessment is taken as relevant date, the demand is barred by time since Show Cause Notice was issued beyond the period of six months and neither it was issued alleging suppression of facts nor issued by the Collector to invoke larger period. It was contended on behalf of the Department that demand is not barred by time since the goods continue to be in bond. Admittedly, the entire factory premises of the Respondent Company was licensed as a private bonded warehouse in accordance with the relevant provisions of Customs Act and the 100% E.O.U. Scheme. The imported goods were received into the factory, declared as Private bonded Warehouse Under Section 59 of Customs Act, 1962 and issued for use into the factory of 100% E.O.U. without payment of duty. There is no consistency on the stand taken by the Department in between time barring issue and premature. We are unable to understand the contention of the Department that provisions relating to Warehousing under Chapter IX of the Act are not applicable since factory is under E.O.U. Scheme governed independently by Notification No. 13/81-Cus. We find that Notification does not determine assessment, levy, collection but it extends some benefits and imposes some restrictions with reference to E.O.U. Scheme. It cannot be read independently but applicable in addition to the provisions envisaged under the Customs Act. The condition specified in the Notification No. 13/81-Cus., the duty in respect of the said imported goods could only be demanded either if the Respondent Company failed to discharge its export obligations or if it ceased to be a 100% E.O.U. None of the aforesaid events has taken place and it is not even the case of the Department that such events have taken place. Under these circumstances, the proper officer will get jurisdiction to determine the duty liability on the imported goods at the time of clearance from Warehouse for home consumption if the duty becomes leviable. Section 68 provides for levy at the clearance for home consumption on presentation of bill of entry in case of Warehoused goods. In the instant case, since the goods in question are warehoused goods the proceedings for levy of duty in respect thereof are premature as it was rightly argued by the respondent’s counsel.
11. Next question remains to be answered whether ‘Dozer Shovel’ can be considered as ‘Production Machinery’. It was contended on behalf of the Department that Dozer Shovel is a material handling equipment since it is used in handling hot metal raw materials, slag and minerals. During the relevant period material handling equipments viz., Fork lifts, overhead cranes, mobile cranes, crawler cranes, hoists and stackers were exempted under Notification No. 13/81-Cus., dated 9-2-1981 as amended and not Dozer Shovel. On going through the detailed process of manufacture and functioning of the Dozer Shovel, it cannot be said that it is a mere material handling equipment. It plays an important part in the process of production. Simply because in the course of performing its function in the process of production the said Dozer Shovel also moves the materials, the same cannot be treated as material handling equipments. The handling of the raw materials and other activities of the Dozer Shovel are integrally connected with the process of production. Going by the nature of the Industry and the various processes employed in connection with the production of the finished product, Dozer Shovel is an essential and integral part of the production machinery at the plant. It is neither possible nor feasible to carry on such activities without Dozer Shovel as it was duly certified by the Technical Experts. Further there is a distinction in classifying the Dozer Shovel different from material handling equipments under Tariff entries in the Excise Tariff as well as Customs Tariff which proves the Dozer Shovel is different from mere material handling equipments which strengthens our view. In the view we have taken, we hold that spares of Dozer Shovels are covered by spares of production machinery under Notification No. 13/81-Cus., dated 9-2-1981 as amended by Notification No. 121/84-Cus. dated 3-5-1984.
12. In view of our foregoing conclusion, these two appeals filed by the Department are hereby dismissed.
P.C. Jain, Member (T)
13. I have perused the order proposed by the learned brother Shri G.A. Brahma Deva, Judicial Member. Some of the issues taken up by both the sides are common to both the appeals. An additional issue on the merits of the question involved therein i.e. whether spares for dozer shovel are ‘spares for production machinery’, is involved in the second appeal namely C/2117/81-B2 except a minor portion of the demand which relates to the period prior to 19-3-1984 when spares were not at all covered by Notification No. 13/81-Cus. dated 9-2-1981.
14. It appears that no arguments have been advanced by the respondents herein regarding the consignment under bill of entry No. 214 dated 21-2-1984 on the issue whether the spares for dozer shovels are at all covered by the Notification No. 13/81-Cus., dated 9-2-1981, as it stood before its amendment on 19-3-1984. It has, therefore, been held by the original authority that the portion of the demand relating to the bill of entry No. 214 dated 21-2-1984 in respect of spares for dozer shovels stands automatically confirmed in the absence of the pleas made by the respondents. I also observe that the lower appellate authority has also not said anything on this aspect of the order-in-original involved in appeal No. C/2117/81-B2 and therefore, there has been no application of mind by him so far as this specific aspect is concerned. The entire thrust of the arguments of the respondents before the Collector (Appeals) who has accepted those pleas, has been that spares for dozer shovels are spares for production machinery. This issue is covered by other bills of entry except the bill of entry 214 dated 21-2-1984. I, therefore, hold that spares for dozer shovels imported vide bill of entry 214 dated 21-2-1984 are not covered by Notification No. 13/81-Cus., dated 9-2-1981, as held by the original authority in its order-in-original No. 6/HEOU/CTC/88 dated 31-5-1988. On merits of the question whether spares for dozer shovels are covered by Notification No. 13/81-Cus. prior to its amendment on 19-3-1984, therefore, the demand of duty on spares for dozer shovels imported vide the aforesaid bill of entry No. 214 dated 21-2-1984 would be sustainable. This point I may mention at this stage does not appear to have been dealt with by the learned Judicial Member in his proposed order. For other bills of entry, I agree with the learned Brother that “spares for dozer shovel” are “spares for production machinery” as described by him in para 11 of his judgment inasmuch as having regard to the peculiar process of production in this case, the final product “charged Chrome” would not have come into existence but for the use of the dozer shovel.
15. Nevertheless, the aforesaid finding on the merits in respect of bill of entry No. 214 dated 21-2-1984 is only of academic interest in view of the findings I propose to give in respect of common issues involved in both the matters because any demand of duty would be hit for lack of jurisdiction or on time bar for the reasons set out below:
15.1 One of the points urged by the learned advocate for the respondents is that show cause notices for demands issued by the Superintendent of Central Excise, In-charge of the respondents’ factory is clearly beyond jurisdiction inasmuch as the goods under consideration were cleared by the Customs authorities either at Vishakhapatnam Port or Calcutta Port after due assessment of the goods Under Section 17 of the Customs Act on bills of entry for warehousing filed by the respondents. If any reassessment of the goods is required to be made, an assessment can be reopened, submits the learned advocate, only by the said Customs authorities. The Central Excise authorities having control over the warehouse (factory) of the appellants do not have any such jurisdiction to …the aforesaid…relied on a number of authorities for this purpose some of which are as follows :-
(1) 1989 (41) E.L.T. 408 – M.K. Fisheries v. C. C
(2) 1990 (45) E.L.T. 622 (Tri.) – Relish Food Pvt. Ltd. v. Collector of Customs.
He has also pointed out that the authorities at Vishakhapatnam Custom House did reopen the proceedings vide their show cause notice-cum-demand notice dated 30-8-1983 but subsequently the said authorities having regard to the various submissions made by the respondents herein in their reply to the show cause notice had withdrawn the said notice. Question of jurisdiction, therefore, urged by him gets strengthened with the proceedings reopened by the Vishakhapatnam Custom House.
15.2 The appellant’s learned D.R., on the other hand, states that the proper officer having jurisdiction over the warehouse/factory of the respondents have acquired -jurisdiction because the goods can be reassessed by the local officers having jurisdiction over the said warehouse. Once the provision for reassessment is there under the Customs Act of the warehoused goods, the officers having jurisdiction over the said warehouse will automatically acquire the jurisdiction to reopen the original assessment and make reassessment thereof.
15.3 1 have carefully considered this plea of the learned advocate and of the learned S.D.R. for the appellant Collector. I am of the view that the reliance placed by the learned advocate on the decision of the Tribunal in M.K Fisheries and Relish Food, mentioned supra is well taken. Original assessment is made by the Custom House concerned at the time of importation of the goods on the strength of in-bond bills of entry filed by the respondents. The assessment which has been made by the Custom House has two elements thereof namely, valuation of the goods and the rate of duty. The original Custom House has applied its mind to the documents submitted by the respondents in respect of both the aspects i.e. valuation and the rate of duty, latter of which is dependent on the classification of goods under the Customs Tariff. If any fresh look is required to be undertaken by way of reassessment in respect of the warehoused goods it can fairly be undertaken only by the concerned Customs House which has made the original assessment. It is not for the other Customs authorities to question the said assessment. In terms of Section 1.5 of the Customs Act rate of duty is, however, to be charged as is applicable on the date of removal of the goods in the warehouse. It is only this aspect i.e. the rate of duty in terms of Section 15 of the Customs Act, without disturbing the classification or rate of duty of the goods, that the officers having jurisdiction over the warehouse will have the authority to apply. If any other aspect of assessment is to be reopened the proper authority, as has been held in the citations relied by the respondents, would be the original Custom House which made the assessment.
16. Another plea of the learned advocate for the respondents is that show cause notice for demand of duty is grossly time barred inasmuch as all the facts were duly placed before the Customs authorities who made the assessment..Nothing can be said to have been concealed or suppressed from the Customs authorities. The authorities were fully aware that the goods imported were spares of capital goods or spares of dozer shovels. Therefore, he submits that the time limit of six months would apply from the date of clearance of the goods as enjoined in Sub-section (3) defining ‘relevant date’ in different situation Under Section 28 of the Customs Act. Clause (a) of Sub-section (3) speaks of demand of duty (within six months in the absence of suppression of facts), from the date on which the proper officer makes an order for the clearance of the goods. The order for clearance of the goods does not mean only order for clearance for home consumption of the goods. It would include clearance for the warehouse as well. On the other hand, he has submitted that if clause (d) of Sub-section (3) is applied six months have to be counted from the date of payment of duty. Date of payment of duty on the goods in question on which the department now seeks to demand duty would have been the date of clearance, had the goods not been given the benefit of Notification 13/81-Cus. In these circumstances, the demand is in any manner time barred.
16.1 Opposing the said contention, the learned S.D.R. has pointed out that demand cannot be time barred because the goods are still under the custody of the department in the warehouse and the goods which were not entitled to the benefit of Notification No. 13/81-Cus. can still be imposed with the relevant liability under the Customs Act. Since the goods are still under the custody of the department it cannot be said that six months in terms of clause (a) of Section 28(3) have expired. He, therefore, submits that there is no question of demand being time barred.
16.2 I have carefully considered this plea from both sides and I find sufficient force in the plea of the learned advocate for the respondents. Department cannot take the contradictory stand of demanding duty on the ground that the goods are still in the warehouse and therefore, under the control of the department and that the demand of duty can still be made because a non-levy/short-levy has taken place. Question of application of Section 28 for payment of duties not levied, short-levied or erroneously refunded – arises only when an assessment has already taken place resulting in non-levy or short-levy or in refund of duty. Therefore, it is inconsistent for the department to say that there has been a short-levy or non-levy when it urges that no assessment has taken place. Clause (a) of Sub-section (3) of Section 28 reads as follows :-
“(a) in a case where duty is not levied, the date on which the proper officer makes an order for the clearance of the goods.”
I am of the considered view that the word ‘clearance’ without any further qualification as to the nature of clearance whether for home consumption or otherwise has been advisedly used in this clause. The word ‘clearance’ would cover within its scope clearance of the goods for home consumption as well as removal of the goods for the warehousing. ‘Clearance of the goods for home consumption’ has been in my view described in another manner in bill of entry form for home consumption by the expression “passed out of customs charge” to be endorsed by the proper officer Under Section 47 of the Customs Act on his satisfaction that the duty assessed Under Section 17 has been paid and all restrictions on the import, if any, have been suitably complied with. Similarly, the word ‘clearance’ occurring in clause (a) of Section 28(3) in respect of the goods to be warehoused, would be synonymous with the expression ‘actual removal from docks’ as is clear from the form of bill of entry for warehousing containing the following expression :-
“to be warehoused within…days from the beginning of the operation of actual removal from docks.”
to be endorsed by the Assistant Collector of Customs, Bond Department. It is, therefore, the fact of date of removal of the goods from docks whether on payment of duty for home consumption or for removal for warehouse which would be relevant for the purposes of application of clause (a) of Section 28(3). Since it is an admitted case that the goods were removed long time back and the show cause notice has been issued long after six months after removal of the goods from the docks for warehousing the demand would be time barred.
16.3 On the question of time bar, looking at from another angle in favour of the department it could also perhaps be argued that clause (d) of Section 28(3) would apply which defines the relevant date as :-
“(d) in any other case the date of payment of duty.”
It was argued in passing by the learned S.D.R. that since no duty has been paid on the ‘spares for capital goods’ or on the ‘spares for dozer shovels’ inasmuch as the goods were removed for warehousing, time for reckoning the limitation Under Section 28 has not yet started and therefore, the demand is not time barred. This argument in my view is also not tenable. As already stated, the question of invoking of Section 28 would arise only when a non-levy or short-levy has arisen. Therefore, the expression ‘date of payment of duty” – occurring in clause (d) of Section 28(3) would have to be read as the ‘date on which payment of duty ought to have had been made’; otherwise this section would have no meaning. Date of payment of duty obviously would be not later than the date on which the goods are to be removed from the docks – whether for warehousing or for home consumption. For reading clause (d) in the above manner I rely on Supreme Court’s judgement in the case of M.B. Sanjana v. Elphinstone Spg. & Wvg. [1978 (2) E.L.T. (J 399)]. In that judgement the word ‘paid’ in the then Rule 10 of the Central Excise Rules, 1944 was read by the Supreme Court ‘ought to have been paid’. It was held that to attract Rule 10 (for recovery of short-levy) it was not necessary that some amount of duty should have been assessed and that the said amount should have also been actually paid. Rule 10 would apply even to cases where there had been a nil assessment. In the present case it is admitted to the department that the goods for which demands have been made now were duly assessed extending to them the benefit of Notification No. 13/81-Cus. If the benefit of the said notification was not available, as is the contention of the department the time limit of six months would count from the said date i.e. the date of assessment when the duty would have been paid on such goods but for the assessment by the department. Thus, in whatsoever manner one looks at the provisions of Section 28 of the Customs Act, there is no doubt that the demand of duty is time barred. I order accordingly.