JUDGMENT
V.B. Raja, J.
1. This is a first appeal by the original plaintiff Messrs. Muljibhai and Snivabhai a registered firm at Anand against the judgment and decree of the Civil Judge Senior Division Nadiad in Special Civil Suit No. 16 of 1956. For convenience the appellant will be hereinafter referred to as the plaintiff. The respondent who is the original defendant is the Union of India New Delhi. The facts of this appeal may be briefly stated as follows:
2. The plaintiff is a licensee under the Central Excise Act, 1944 and is a dealer in tobacco. The plaintiff cleared from the warehouse at Anand un-manufactured tobacco weighing 95 324 1 on payment of duty amounting to Rs. 47 671 at the rate of Re. 0-8-0 per 1b. on various dates during the period from 1-3-51 to 27-4-51. According to Section 7(2) of the Finance Act 1951 this tobacco was subject to duty at Re.10-14-0 per 1b. and the differential duty at 0-6-0 per 1b. amounting to Rs. 35 299 was demanded on 13-8-51. Against this demand an amount of Rs. 25 533 was paid in four installments between 28-9-51 and 18-1-52 and a sum of Rs. 11 766 was in arrears. Under the Finance Act of 1951 duty on certain categories of tobacco was reduced from 8 annas per 1b. to 6 annas per 1b. The difference at the rate of 2 annas per 1b. was to be refunded on production of certificates from Superintendents of Central Excise stating that the tobacco was of that category. At a later stage in accordance with the orders in force then the licensees produced certificates from the Superintendents Central Excise Bhavnagar and Trivendrum in respect of 1 284 and 27 28 5 1 of tobacco respectively. Accordingly on 26-3-52 the Superintendent Central Excise Anand as per orders in force then reassessed the above referred quantity of tobacco i.e. 1 284 86 and 2728 5 1 at 0-6-0 per 1b. instead of 0-14-0 per 1b. and allowed an adjustment of Rs. 14 156 at 0-8-0 per 1b. thereon. This adjustment resulted in excess payment of duty amounting to Rs. 2 390 by the licensee who claimed refund of that much amount. On scrutiny of the certificate issued by the Superintendent Trivendrum in respect of 27 28 5 1 of tobacco it was observed that it was incomplete and did not make the tobacco covered thereunder eligible to reassessment at a lower rate of duty at 0-6-0 per 1b. This being the case a further clarification was sought for from the Superintendent Central Excise Trivendrum as a result of which it was found that the tobacco was not of the category of tobacco which was dutiable at the rate of 6 annas per 1b. In the above circumstances on 22-12-52 the Superintendent Central Excise Anand cancelled his order No. V(a) 24-13/52 dated 26-3-52 and the above referred quantity of tobacco weighing lbs. 27 285 which was incorrectly reassessed at 0-6-0 per 1b. originally on the strength of the certificate issued by the Superintendent Central Excise Trivendrum was subjected to duty at 0-14-0 per 1b. Accordingly on 22-12-52 the Superintendent Central Excise Anand under his Order No. V(a) 24-13/52 dt. 2212 demanded duty amounting to Rs. 13 514 from the licensees. The licensees in their letter dated 29th June 1953 protested against this demand.
3. The plaintiff received a letter from the Assistant Collector of Central Excise Anand dated 24th/25th February 1954 upholding the decision of the Superintendent of the Central Excise Anand. The plaintiff then appealed to the Collector of the Central Excise Baroda who rejected the appeal on 14-2-55. While the appeal was pending before the Collector of the Central Excise Baroda the plaintiff was compelled to pay Rs. 11 124 as a condition precedent to the hearing of this appeal. A revision application to the Government of India was also rejected on 21-11-55. The plaintiff therefore filed this suit against the Union of India contending that the defendant had illegally recovered Rs. 13 514 from the plaintiff which the plaintiff is entitled to get back. A notice as required under Section 80 C.R Code was also given to the defendant.
4. In its written statement the defendant contended that it was through mis-interpretation of the certificate of the Superintendent of Central Excise Trivendrum in respect of 27 22 1 That the Superintendent Central Excise Anand ordered an incorrect assessment although the tobacco in question was not entitled to re-assessment at the lower rate of six annas per 1b. It was contended that the Superintendent Central excise Anand was therefore within his power to re-assess the tobacco at 14 annas per 1b. It was denied that the action of the Superintendent Central Excise Anand was without jurisdiction or without authority illegal and improper. It was denied that Rule 10 of the Central Excise Rules 1944 applied to the facts of this case. It was contended that the suit was barred by law of limitation and by the provisions of Section 40 of the Central Excises and Salt Act 1944.
5. The learned Civil Judge held that the Superintendent Central Excise Anand was Justified in re-assessing the tobacco at 14 annas per pound and that his action was with jurisdiction legal and proper. He also ordered that the orders of the Assistant Collector Central Excise Anand of the Collector of Central Excise Baroda and of the Government of India were quite legal with jurisdiction and proper. He held that the suit was not barred by limitation but was barred by the provisions of Section 40 of the Central Excises and Salt Act 1944 He also held that Rule 10 of the Central Excise Rules 1944 did not apply to the facts of the present case but Rule 10A of the said Rules applied. On these findings he dismissed the suit of the plaintiff with costs.
6. In First Appeal these findings are challenged. The finding of the lower Court that the suit is not barred by limitation has been accepted by both sides and was not argued before us. The points argued before us are: (1) Whether the suit is barred by Section 40 of the Central Excises and Salt Act 1944 (2) whether it is barred by Section 35(2) of the said Act; (3) whether the Excise authorities should have given a notice to the plaintiff to show cause before canceling the order dated 26-3-52 and (4) whether the order dt. 22-12-52 is illegal. We hold that the suit is not barred under Section 40 or under Section 35(2) of the Central Excises and Salt Act 1944 and that the order passed by the Superintendent Central Excise Anand on 22-12-52 canceling the order issued by the Supdt. Central Excise Anand on 26-3-52 and raising the amount of duty payable is illegal and contrary to the Act and the rules made under the Act.
7. To recapitulate the facts in brief. Before the Finance Act of 1951 came into force the rate payable on the tobacco was eight annas per 1b. But after the Finance Act 1951 the rate of duty on the tobacco was raised to 14 annas per 1b. and the duty payable on tobacco which came in a special class was fixed at six annas per 1b. instead of eight annas per 1b. In view of the Finance Act 1951 whereby the duty on tobacco which did not fall in the special class was increased from 8 annas to 14 annas per 1b. an additional amount of duty amounting to Rs. 35 299 14 was demanded by the Inspector Central Excise Anand on 13-8-51 The previous duty payable on the tobacco was already paid to the extent of Rs. 47 0 and odd. In August 1951 Rule 10A of the Central Excise Rules 1944 did not exist. Rule 10A was inserted by Notification dated 8 Rules 10 and 10A of the Central Excise Rules 1944 read as follows:
10 Recovery of duties or charges short-levied or erroneously refunded. When duties or charges have been short levied through inadvertence error collusion or mis-construction on the part of an officer or through mis-statement as to the quantity description or value of such goods on the part of the owner or when any such duty or charge after having been levied has been owing to any such cause erroneously refunded the person chargeable with the duty or charge so short-levied or to whom such refund has been erroneously made shall pay the deficiency or repay the amount paid to him in excess as the case may be on written demand by the proper officer being made within three months from the date on which the duty or charge was paid or adjusted in the owners account-current if any or from the date of making the refund. 10 Residuary powers for recovery of sums due to Government. Where these Rules do not make any specific provision for the collection of any duty or of any deficiency in duty if the duly has for any reason been short-levied or of any other sum of any kind payable to the Central Government under the Act or the Rules such duty deficiency in duty or sum shall on a written demand made by the proper officer be paid to such person and at such time and place as the proper officer may specify.
8. In view of Rule 10A the authority of the Excise Officers to demand an amount Rs. 35 299 as a consequence of the Finance Act of 1951 is not challenged before us and it is conceded that the demand of an additional amount of Rs. 35 299 was perfectly right under Rule 10A of the Central Excise Rules 1944 The Superintendent of Central Excise Anand passed an order on 26-3-52 stating that in view of the certificate issued by the Superintendent Central Excise Trivendrum he was satisfied that 27028 1/2 lbs. of tobacco fell under the special class on which duty payable was only at six annas per 1b. The order therefore withdrew the assessment of the excess duty at six annas per 1b. on this quantity and also directed that refund of two annas per 1b. should be adjusted with the outstanding differential duty. The amount of Rs. 35 0 and odd payable as duty on this quantity of tobacco was calculated at 14 annas per 1 less 8 annas per 1b. already paid but as the authorities were satisfied that this tobacco of 270286 lbs. came under the special category in view of the certificate of the Superintendent Central Excise Trivendrum the duty payable on this quantity was at six annas per 1b. and therefore the duty of eight annas per 1b. was to be adjusted. Therefore the additional payment of Rs. 35 0 and odd was revised to Rs. 21 143 On account of the Finance Act 1951 therefore this amount was payable by the plaintiff in addition to the amount that he had paid before the Finance Act 1951 But actually after the Finance Act of 1951 he paid Rs. 23 533 by four installments each of Rs. 5883-5-0 on 28-9-51 9 6 and 18-1-52. The authorities therefore reduced the additional demand of Rs. 35 288 to Rs. 21143/-.
9. This revised assessment the learned Government Pleader for the respondent contends was justified and with jurisdiction. He concedes that the order dt. 26-3-52 reducing the additional amount from Rs. 35 299 to Rs. 21 143 was perfectly justified and legal. But the matter of controversy arises out of the letter of the Superintendent Central Excise Anand written to the plaintiff on 21-12-52 stating that the certificate of the Superintendent Central Excise Trivendrum on which he had previously relied did not satisfy the requirement of the Finance Act 1951. He therefore stated that the previous order reducing the rate to six annas per 1b. in respect of 270282 lbs. of tobacco was wrong and that on this quantity of tobacco the full duty at the rate of 14 annas per 1b, was payable and the rate of 8 annas per 1b. was therefore demanded within 10 days. The contention of the appellant is that this order dated 28-12-52 of the Superintendent Central Excise Anand is illegal and contrary to the Act and the Rules made thereunder and it is also contended that no notice was given to the plaintiff to show cause against the order. Under the Central Excise Act and the Rules framed thereunder a provision is made for the assessment of tax or duty payable. Rule 10 of the Excise Rules already quoted above provides for two circumstances (1) when there is a short levy and (2) when after having been levied the duty has been erroneously refunded. The short levy referred to is a short levy through inadvertence error collusion or mis-construction on the part of an officer or through mis-statement as to the quantity description or value of such goods on the part of the owner. The rule provides that for the deficiency in the case of a short levy or the amount in the case of an erroneous refund demand of the refund may be made within three months from the date on which the duty or charge was paid or from the date of making the refund. Rule 10A of the Excise Rules gives powers to the authorities for the recovery of sums due to Government in two cases: (1) where the rules do not make any specific provision for the collection of any duty or of any deficiency in duty if the duty has for any reason been short-levied and (2) where any other sum of any kind is payable to the Central Government under the Act or the Rules. In these cases power was given to demand the amount and to recover the sums due to Government irrespective of the period of three months provided in Rule 10. The case of a short levy is referred to in Rule 10A. But Rule 10 refers to a short levy through inadvertence error collusion or mis-construction on the part of an officer or through mis-statement as to the quantity description or value of such goods on the part of the owner and Rule 10A refers to a short levy in respect of which the rules do not make any specific provision. In other words Rule 10A refers to a short levy for reasons other than those enumerated in Rule 10. Another point of distinction between Rule 10 and Rule 10A is that Rule 10 specifically refers to an amount erroneously refunded whereas Rule 10A makes no reference to amounts erroneously refunded. An amount erroneously refunded can be recovered under Rule 10 of the Excise Rules provided the demand is made within three months from the date of making the refund. Of course as provided in Rule 10A if any other sum of any kind is payable to the Central Government under the Act or the Rules then Rule 10A would apply.
10. In the instant case the duty payable on the tobacco of the plaintiff was “assessed at Rs. 47 0 and odd and was paid before the Finance Act 1951 After the Finance Act 1951 some additional sum was payable in respect of the same tobacco and the amount previously recovered fell in the category of a short levy. But the short levy was not for the reasons stated in Rule 10 and therefore it fell within Rule 10A. Therefore the demand for the additional amount of Rs. 35 299 fell within Rule 10A and it is conceded by both sides that this demand is justified and legal as the matter stood on that date. After the additional payment was made treating the previous amount as a short levy the assessment was revised on 26-2-52 and the Superintendent Central Excise Anand wrote to the plaintiff that the additional amount due was not Rs. 35 299 but only Rs. 21 143 As already observed the learned Government Pleader has conceded that this revision of the rate was perfectly justified and legal and the Superintendent Central Excise Anand was competent in reducing the assessment from Rs. 35 299 to 21 143.
11. Now it is to be seen as to what is the legal effect of the order on 22-12-52. By that order the Superintendent Central Excise Anand stated that the reduction of ‘the assessment to Rs. 21 143 was wrong and the assessment should have been Rs. 34 657 by adding the amount of Rs. 13 514 at the rate of eight annas per 1b. on 27028 1/2 1b. of tobacco as the certificate granted by the Superintendent Central Excise Trivendrum was not found to be in order. In other words the previous amount of Rs. 21 143 was treated as a short levy. If it is a short levy the question whether Rule 10 or Rule 10A applies would depend on the nature of the short levy. It is conceded that the short levy was due to the fact that there was an error in construing the certificate of the Superintendent Central Excise Trivendrum. As the short levy was due to an error and misconstruction on the part of the officer the short levy would fall under Rule 10 and the deficiency can be recovered under Rule 10 only within three months from the date on which the duty or charge was paid or adjusted. The whole duty namely the amount of 21 143 had been paid. In fact more had been paid to the extent of Rs. 2 390. The whole amount including the excess was paid on 18-1-52. Under Rule 10 therefore the deficiency due to the short levy can he recovered only within three months from 18-1-52. Even if we take the starting point of time as 26 the amount could be recovered only before 26-6-52. But the order demanding the deficiency was passed on 22-12-52. The Order is therefore contrary to Rule 10 of the Central Excise Rules.
The question has to be considered whether the additional amount of Rs. 13 514 was payable under the Act or under the Rules. If the amount was payable under the Act or under the Rules then Rule 10A would apply. But the learned Government Pleader has conceded before us that there is nothing in the Act or in the Rules under which the additional amount was recovered or demanded. His only contention is that the additional amount was recovered because of an erroneous interpretation of the certificate issued by the Superintendent Central Excise Anand. His contention is that there was an error and the error could be rectified at any stage. As already pointed out the case would fall under Rule 10 and the error can be rectified within the period mentioned in Rule 10. As this has not been done the order (Ex. 76) dated 22-12-52 is illegal and contrary to the Act. In view of this finding it is not necessary to consider the question whether it was necessary for the authorities to give a notice to the plaintiff to show cause against the order.
12. It is however contended that the suit is barred under Section 40 of the Central 1 Excise Act. This section reads as follows:
(1) No suit shall lie against the Central Government or against any officer of the Government in respect of any order passed in good faith or any act in good faith done or ordered to be done under this Act.
(2) No suit prosecution or other legal proceeding shall be instituted for anything done or ordered to be done under this Act after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of.
13. The section refers to an order passed in good faith or any act in good faith done or ordered to be done under the Act. The order must be passed under the Act or the act must be done or ordered to be done under the Act. There is nothing in the Act providing for the passing of an order like Ex. 76. Rule 10 of the Excise Rules provides for the passing of such an order if it is passed within three months from 18-1-52 a already stated but the order in question was passed about 9 or 11 months from the starting point of time. The order does not therefore fall under Rule 10A of the Excise Rules as the order (Ex. 76) is not an order passed under the Act or under the Rules. Section 40 of the Excise Act does not therefore save the liability of the Central Government or an officer of the Government in respect of an act done or order passed which is obviously illegal and contrary to the Act and Rules.
The learned Government Pleader next contended that the suit is also barred under Section 35(2) of the Act. Section 35(2) of the Act reads as follows:
Every order passed in appeal shall subject to the power of revision conferred by Section 36 be final.
Section 35 which provides for appeals also provides that every order passed in appeal under that section shall subject to the power of revision conferred by Section 36 be final. It is contended that as the plaintiff has resorted to an appeal to the Collector and also to a revision application to the Government of India the orders passed by the Collector in appeal and by the Government of India in revision are final and that no suit lies against the Government or its officer. The Learned Government Pleader relies on Secretary of State v. Mask and Co. In that case an order had been passed under the Sea Customs Act. By Sections 188 and 191 of that Act a precise and self-contained code of appeal was provided in regard to obligations which are created by the statute itself. Their Lordships of the Privy Council observed at p. 110 as under:
It is difficult to conceive what further challenge of the order was intended to be excluded other than a challenge in the Civil Courts In this case the jurisdiction of the Civil Courts is excluded by the order of the Collector of Customs on the appeal under Section 188 and it is unnecessary to consider whether prior to taking such appeal under Section 188 the respondents would have been entitled to resort to the Civil Courts or whether they would have been confined to the right of appeal under Section 188. But these observations must be read with reference to the decision of their Lordships that in that case the order passed fell within the purview of Section 188.
14. The order challenged was therefore passed within the Act and under the Act. But in the same case their Lordships made the following observations:
It is settled law that the exclusion of the jurisdiction of the Civil Courts is not to be readily inferred but that such exclusion must either be explicitly expressed or clearly implied. It is also well settled that even if jurisdiction is so excluded the Civil Courts have jurisdiction to examine into cases where the provisions of the Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. Many of the cases referred to in the judgments below are of this nature and are not relevant to the present case in which there are no allegations of that nature.
15. In the case before the Privy Council there was no allegation that the provisions of the Act had not been complied with and it is to such a case that the observations of their Lordships that the jurisdiction of the Civil Courts is excluded by the order of the Collector in appeal have reference. If the order passed is illegal and unjustified the observations of their Lordships that the Civil Courts have jurisdiction to examine into case where the provisions of the Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure would apply. In view of these observations we hold that there is no merit in the contention of the learned Government Pleader that Section 35(2) is a bar to this litigation.
16. In the result the suit filed by the plaintiff is not barred and the claim is also justified. The decree passed by the lower Court would therefore be set aside and the plaintiffs suit decreed in full. The appeal is allowed with costs throughout.
