Supreme Court of India
M/S. THE BOMBAY DYEING AND MFG. CO. LTDNER OF CENTRAL EXCISEversusTHE COMMISSIONER OF CENTRAL EXCISE
- Citation
- 2019 INSC 1338
- Decided
- 9 December 2019
- Disposal
- Dismissed
Holding
When an assessee voluntarily executes Form B‑13 bonds under Rule 9B, the assessment is provisional and Section 11A does not apply; the demand for excise duty is valid and not barred by limitation.
Summary
The appellant, Bombay Dyeing, manufactured cotton and man‑made fabrics and claimed that excise duty was not payable on yarn processed in its composite mills, seeking interim relief by executing Form B‑13 bonds under Rule 9B of the Central Excise Rules. The Delhi High Court, referencing Rohit Mills, disposed of the writ petitions but did not order a Section 11A notice. The department later demanded excise duty for 1981‑85, asserting that the assessment was provisional under Rule 9B and that Section 11A did not apply. The appellant argued that a Section 11A notice was mandatory and that the demand was barred by limitation. The Supreme Court held that because the appellant voluntarily executed B‑13 bonds, the assessment was indeed provisional, Section 11A was inapplicable, and the demand for duty was valid and not time‑barred. Consequently, the appeal was dismissed.
Issues considered
- Whether Section 11A of the Central Excise Act applies to a demand where the assessment was provisional under Rule 9B and the assessee executed Form B‑13 bonds.
- Whether the demand for excise duty is barred by limitation in view of the provisional assessment procedure.
- Whether the Delhi High Court's order obliges the department to issue a Section 11A notice, thereby precluding the demand.
Legislation cited
- Central Excise Act, 1944s. 11A, s. 11AB
- Central Excise Rules, 1944s. 49, s. 9, s. 9B
Subjects
central exciseprovisional assessmentSection 11AForm B-13 bondlimitation periodexcise duty liabilitycomposite millscaptive consumption
Judgment
[2019] 17 S.C.R. 1057 1057
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. A
v.
THE COMMISSIONER OF CENTRAL EXCISE
(Civil Appeal No. 5297 of 2008)
DECEMBER 09, 2019 B
[A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
Central Excise Act, 1944 – s.11A – If applicable to cases of
provisional assessment – Appellant, engaged in manufacture of
cotton and man-made fabrics, filed writ petitions inter alia seeking
C
direction that excise duty is not payable in respect of yarn
processed further in it’s composite mills in the manufacture of
fabrics – Also sought interim reliefs – Granted by High Court –
Appellant executed bonds in Form B-13 referable to r.9B, 1944
Rules and also furnished Bank guarantee (BG) for equivalent
amount of the differential duty in respect of the fabric in question D
– Interim relief modified on 14.05.85 – Writ petitions disposed of
on 10/12.03.93 – Assistant Collector of Central Excise informed
the appellant that s.11A was not applicable to the facts of the
present case – Appellant asserted that the Show Cause Notice
u/s.11A was mandatory – Appellant was called upon to pay
E
Rs.35,92,234.67/- in view of order dtd. 14.05.85 failing which the
department was to take steps to enforce the BG – Personal hearing
given to the appellant – Demand of excise duty confirmed by
Assistant Collector of Excise – Appeals by the appellant before
appellate authorities were dismissed – High Court also dismissed
the appeal – Held: s.11A as applicable at the relevant time, would F
apply to cases of recovery of duties not levied or not paid or short-
levied or short-paid etc. – Case at hand, however, would come
within the dispensation predicated by r.9B, 1944 Rules, which deals
with provisional assessment to duty – Appellant cannot be allowed
to approbate and reprobate- for inviting the High Court to pass
G
interim order stipulating that the appellant would execute bonds
in Form B-13 referable to r.9B of the Rules and continue to file
monthly RT-12 returns from time to time, on which endorsements
were made indicating that it is a case of provisional assessment –
Appellant cannot now be permitted to urge that it had not submitted
to the process of provisional assessment as such for lack of a H
1057
1058 SUPREME COURT REPORTS [2019] 17 S.C.R.
A specific order of the concerned authority in that behalf – Stand
taken by the parties as recorded in order dtd. 10/12.03.93, is
limited to accepting the fact that if notice is required to be given,
it will be given and it will be open to the appellant to file response
and the authorities would take decision after giving opportunity
– Nothing more can be read into it – Said order in no way
B
extricated the appellant from the process to which it had voluntarily
submitted itself at its own volition, namely, u/r.9B of the Rules –
Thus, it was not a case of duty not levied or not paid or short-
levied or short-paid – It is certainly not an order to undo the
obligation accepted by voluntarily executing the bonds in the
C prescribed format i.e. Form B-13 referable to r.9B- to treat the
process as provisional assessment until the disposal of the writ
petitions – Also, authorities later on passed the final order after
the disposal of the writ petitions – A priori, they did not violate any
direction contained in order dtd. 10/12.03.93 and for having
proceeded in accordance with law for the period between 25.05.81
D
to 13/14.05.85 – Order of the High Court is to be understood in
proper perspective and not to give undue advantage to or bestow
favour on the appellant and deprive the legitimate State exchequer
– Central Excise Rules, 1944 – r.9 r/w r.49 ; r.9B – Excise Duty.
Dismissing the appeal, the Court
E
HELD: 1.1 In the writ petitions, the appellant had asserted
that the fabric manufactured by the appellant was not amenable
to excise duty as it was not removed from the premises within
the meaning of Rules 9 and 49 of the Rules. Indisputably, the
purport of the stated Rules has been finally answered by
F
Supreme Court in M/s. J.K. Cotton Spinning and Weaving Mills
Ltd. & Anr. vs. Union of India & Ors. after resolving the
conflicting opinions of different High Courts including of the High
Court of Delhi. The stand taken by the appellant in the writ
petition has been negatived by this Court, in the said decision.
G Thus, the question relating to liability to pay excise duty was
not and could not have been disputed by the appellant at least
after this decision. [Para 18] [1077-C-D]
1.2 The appellant voluntarily furnished requisite bonds in
Form B-13 referable to Rule 9B supported by bank guarantee
H for equivalent amount of the differential duty. It is not an
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1059
COMMISSIONER OF CENTRAL EXCISE
undertaking filed pursuant to the order of the Court. Concededly, A
the order disposing of the writ petitions does not absolve the
appellant from the said bonds ; nor the endorsements made
thereon and on the monthly RT-12 returns, indicating that it was
a provisional assessment have been ordered to be effaced. The
order dated 10/12.3.1993 passed by the High Court of Delhi,
B
disposing of the writ petitions filed by the appellant in no way
extricate the appellant from the process to which the appellant
had voluntarily submitted itself at its own volition, namely, under
Rule 9B of the Rules. Thus, it was not a case of duty not levied
or not paid or short-levied or short-paid. The understanding of
the parties was absolutely clear that the appellant was liable to C
pay excise duty, but for the exposition of the High Court of Delhi
in J.K. Cotton Spinning & Weaving Mills Co. Ltd. & Ors.. The
appellant is obliged to fulfill its statutory obligations including
those arising from the undertaking/bonds in Form B-13 and
cannot resile from the process to which it had submitted itself
D
without any demur, namely under Rule 9B of the Rules. [Para
20] [1077-G-H; 1078-A-D]
J.K. Cotton Spinning & Weaving Mills Co. Ltd. & Ors.
v. Union of India & Ors. (1981) 8 ELT 887 (Del.) -
referred to.
E
1.3 In Rohit Mills Ltd., the Supreme Court dealt with two
situations referred to therein. First, where Show Cause Notices
under Section 11A of the Act have been served and the claim
does not cover any period beyond six months from the date of
receipt of the notices. Second, where there is dispute as to F
whether the notice under Section 11A had been issued or not.
In the present case, none of the above is attracted ; and for the
same reason the exposition in paragraphs 30 to 33 of M/s. J.K.
Cotton Spinning and Weaving Mills Ltd. on which reliance has
been placed by the appellant, would be of no avail to the
appellant. Section 11A of the Act as applicable at the relevant G
time, would apply to cases of recovery of duties not levied or
not paid or short-levied or short-paid etc. The case at hand,
however, would come within the dispensation predicated by Rule
9B of the Rules, which deals with provisional assessment to
duty.[Paras 20-22] [1078-D-G; 1082-D] H
1060 SUPREME COURT REPORTS [2019] 17 S.C.R.
A Rohit Mills Ltd. & Ors. v. Union of India & Ors.
(1988) 18 ECR 17 SC ; M/s. J.K. Cotton Spinning and
Weaving Mills Ltd. & Anr. v. Union of India & Ors.
(1987) (Supp) SCC 350 : [1988] 1 SCR 700 – held
inapplicable.
B 1.4 The stand taken by the parties as recorded in the order
dated 10/12.3.1993, is limited to accepting the fact that if notice
is required to be given, the same will be given and in that case
it will be open to the appellant to file response thereto and
further, the authorities would take decision after giving
opportunity to the assessee. Nothing more can be read into the
C order dated 10/12.3.1993 passed by the High Court of Delhi. It
is certainly not an order to undo the obligation accepted by the
assessee by voluntarily executing the bonds in the prescribed
format, namely, Form B-13 referable to Rule 9B of the Rules-
to treat the process as provisional assessment until the disposal
D of the writ petitions. The authorities later on passed the final
order after the disposal of the writ petitions. A priori, the
authorities have not violated any stipulation or direction
contained in the order dated 10/12.3.1993 passed by the High
Court of Delhi and for having proceeded in accordance with law
for the period between 25.5.1981 to 13/14.5.1985. [Paras 24, 25]
E [1084-B-D]
1.5 Similarly, the exposition of this Court in Metal Forgings
and Hindustan National Glass & Industries Ltd. to urge that
specific order was required to be passed before an assessment
is treated as a provisional assessment, will be of no avail
F considering the execution of bonds in Form B-13 by the
appellant-assessee at its own volition, which is referable to
provisional assessment procedure under Rule 9B of the Rules.
Once the appellant submitted itself to that procedure without
any demur pending disposal of the writ petitions, it is not open
G to later on resile therefrom. Permitting the assessee to do so,
would inevitably result in giving undue advantage and favour to
the assessee, who had invoked the remedy under Article 226
of the Constitution of India and sought interim protection on
offering to execute bonds in Form B-13 as is noted in the Prayer
clause (a) of the civil miscellaneous petition(s). For the same
H reason, the circular issued by the Government of India pressed
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1061
COMMISSIONER OF CENTRAL EXCISE
into service will be of no avail to the appellant.The appellant A
cannot be allowed to approbate and reprobate - for inviting the
High Court of Delhi to pass interim order stipulating that the
appellant would execute bonds in Form B-13 referable to Rule
9B of the Rules and continue to file monthly RT-12 returns from
time to time, on which endorsements have been made indicating
B
that it is a case of provisional assessment. The appellant cannot
now be permitted to urge that it had not submitted to the process
of provisional assessment as such for lack of a specific order of
the concerned authority in that behalf. The order passed by the
High Court of Delhi on 10/12.3.1993, will have to be understood
in proper perspective and not to give undue advantage to or C
bestow favour on the appellant and thereby deprive the
legitimate State exchequer. [Paras 31, 32] [1087-H; 1088-A-D-
F]
The Bhopal Sugar Industries Ltd. v. The Income Tax
Officer, Bhopal [1961] 1 SCR 474 ; R.B.F. Rig D
Corporation, Mumbai v. Commissioner of Customs
(Imports), Mumbai (2011) 3 SCC 573 : [2011] 2 SCR
691 ; Metal Forgings & Anr. v. Union of India & Ors.
(2003) 2 SCC 36 ; Kalabharati Advertising v. Hemant
Vimalnath Narichania & Ors. (2010) 9 SCC 437 :
[2010] 10 SCR 971 ; Jagmittar Sain Bhagat & Ors. v. E
Director, Health Services, Haryana & Ors. (2013) 10
SCC 136 : [2013] 8 SCR 77 – held inapplicable.
J.K. Cotton Spinning and Weaving Mills Co. Ltd. v.
Collector of Central Excise (1998) 3 SCC 540 : [1998]
2 SCR 102 ; The Jam Shri Ranjitsinghji Spg. & Wvg. F
Mills Co. Ltd. & Anr. v. Union of India & Ors. (2007)
109 Bom LR 2167 ; Commissioner of Central Excise,
Calcutta v. Hindustan National Glass & Industries Ltd.
(2005) 3 SCC 489 : [2005] 2 SCR 744 ; Coastal
Gases and Chemicals Pvt. Ltd. v. Assistant Collector
of Central Excise, Visakhapatnam & Ors. (1997) 7 G
SCC 223 – referred to.
Case Law Reference
(1981) 8 ELT 887 (Del.) referred to Para 1
(1988) 18 ECR 17 SC held inapplicable Para 6 H
1062 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (2007) 109 Bom LR 2167 referred to Para 11
[1961] 1 SCR 474 held inapplicable Para 15
[2011] 2 SCR 691 held inapplicable Para 15
(2003) 2 SCC 36 held inapplicable Para 15
B [1998] 2 SCR 102 referred to Para 15
[2005] 2 SCR 744 referred to Para 15
[2010] 10 SCR 971 held inapplicable Para 15
[2013] 8 SCR 77 held inapplicable Para 15
C (1997) 7 SCC 223 referred to Para 15
[1988] 1 SCR 700 held inapplicable Para 18
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5297
of 2008.
D From the Judgment and Order dated 13.09.2007 of the High
Court of Judicature at Bombay in Central Excise Appeal No. 237 of
2006.
Kavin Gulati, Sr. Adv., Mrs. Nandini Gore, Ms. Tahira
Karanjawala, Ms. Natasha Sahrawat, Arjun Sharma, Mrs. Manik
E Karanjawala, Advs. for the Appellant.
A.K. Sanghi, Arijit Prasad, Sr. Advs., B.V. Balaram Das,
Mullapudi Ram Babu, Ms. Alka Agrawal, B. Krishna Prasad, Advs.
for the Respondent.
The Judgment of the Court was delivered by
F
A. M. KHANWILKAR, J.
1. This appeal is directed against the judgment and order dated
13.9.2007 passed by the High Court of Judicature at Bombay in Central
Excise Appeal No. 237 of 2006. Briefly stated, the appellant is engaged
in manufacture of cotton and man-made fabrics. According to the
G
appellant, the fabric manufactured by the appellant was not amenable
to excise duty since it was for captive consumption and not to be
removed for the purposes of sale or for consumption as envisaged under
Rule 9 read with Rule 49 of the Central Excise Rules, 1944 (for short,
‘the Rules’). On this assertion and relying on the decision of the High
H Court of Delhi in J.K. Cotton Spinning & Weaving Mills Co. Ltd. &
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1063
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
Ors. vs. Union of India & Ors.1, the appellant filed two writ petitions A
under Article 226 of the Constitution of India before the High Court of
Delhi being Civil Writ Petition Nos. 1234/1981 and 1235/1981. The
reliefs claimed in both petitions are identical except that they pertain to
separate periods. We may reproduce the reliefs claimed in Writ Petition
No. 1235/1981, for the sake of convenience. The same read thus: -
B
“(a) Issue a suitable writ, order or direction declaring that
duty of excise is not payable in respect of yarn (Cotton
and man made) processed further in the petitioner’s
composite mills in the manufacture of fabrics:
(b) Issue writ of certiorari or any other suitable writ, order C
or direction in the nature thereof quashing and setting
aside the decisions and directives of the Central Board
of Excise, respondent No.2, contained in circular letters
dated 6.10.1976 (Annexure A), 24.9.1980 (Annexure B)
and to quash the notices dated 23.4.1981 (Annexure C)
D
and all similar notices referred to in the statement
(Annexure D), dated 7.1.1981 (Annexure G) and dated
9.3.1981 (Annexure H):
(c) Issue a writ of mandamus or any other appropriate writ,
order or direction in the nature thereof, restraining the E
respondents from levying or collecting duty of excise in
respect of yarn obtained by the petitioner at an
intermediary stage in its composite mill for further
processing in the manufacture of fabrics and to direct
the Board, respondent No.2, to cancel and/or withdraw
the decisions and directives contained in circular letters F
dated 6.10.76 (Annexure A) and 24.9.80 (Annexure B)
and to direct respondent 3 and 4 to cancel and/or
withdraw the notice dated 23.4.1981 (Annexure C),
23.2.81 (Annexure G) and all similar notices referred
to in the statement (Annexure D), dated 7.1.1981 G
(Annexure G) and 9.3.1981 (Annexure H) and to
restrain defendants 3 and 4 from taking any steps or/
proceedings pursuant to and in accordance with the
aforesaid directives and notices.
1
1981 (8) ELT 887 (Del.) H
1064 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (d) Issue a writ of prohibition or any other appropriate writ,
order or direction in the nature therefore, restraining the
respondent from collecting duty of excise on yarn
obtained by the petitioner in its composite mill which is
further processed in the manufacture of fabrics.
B (e) Issue appropriate writ, order or direction directing the
respondent to refund the amount of duty illegally
recovered from the petitioner in respect of yarn obtained
in the petitioner’s composite mills and further processed
in the manufacture of fabrics for the period commencing
C from 15.7.1977 in respect of cellulosic spun yarn and
non-cellulosic spun yarn and from 17.3.1972 and in
respect of cotton yarn and from 15.7.77 upto the date
of disposal of the present writ petition and in particular
the amounts referred to in statement (annexure E)
together with interest at the rate of 12% p.a. and in the
D alternative to direct Respondents No.3 and 4 to grant
the refund as per refund claims dated 13.5.1981 (colly.);
(f) In the alternative and without prejudice to the aforesaid
prayers, to issue a writ of mandamus or any other writ,
order or direction in the nature thereof direction the
E
respondent not to collect duty of excise in respect of
yarn upon sizing thereof processed in the manufacture
of fabrics.
(g) In the alternative and without prejudice to the aforesaid
F prayers, issue writ of prohibition or any other writ, order
or direction in the nature thereof, restraining the
respondents from levying or collecting duty of excise in
respect of yarn processed within the petitioner’s
composite mills on the basis of the weight of yarn after
sizing thereof.
G
(h) To pass such other and further orders as may be
deemed just and proper in the facts and circumstances
of this case; and
(i) Award costs of the writ petition in favour of the
H petitioner.”
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1065
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
2. During the pendency of the aforementioned writ petitions, the A
appellant filed Civil Miscellaneous Petition Nos. 1698/1981 and 1699/
1981 in the concerned writ petitions, praying for interim reliefs. For
the sake of convenience, the reliefs claimed in Civil Miscellaneous
Petition No. 1699/1981 filed in Writ Petition No. 1235/1981 are
reproduced below: -
B
“(a) grant order of stay permitting the petitioners forthwith
to further process and use cellulose and non-cellulosic
spun yarn, man-made filament yarn and cotton yarn in
its composite mill in the manufacture of man-made
fabric, cotton fabric and woollen fabric at nil rate of duty
and to clear cotton fabrics forthwith upon payment of C
duty in respect of cotton fabric only (without payment
of duty on cotton yarn) upon the petitioners undertaking
to furnish the requisite bond in Form B-13 Rule 9B
supported by a bank guarantee for an amount equivalent
to 25% of the differential duty in respect of such yarn D
within three weeks hereof and to restrain the respondent
3 to 4 from taking any action or proceedings pursuit to
the directives of the Board, respondent No.2 (Annexures
A and B to the writ petition) and notices dated 23.4.1981
(Annexure C to the writ petition), and all similar notices
referred to in the Statement (Annexure D), dated E
7.1.1981 (Annexure G to the Writ Petition) and 9.3.1981
(Annexure H to the Writ Petition):
(b) grant exparte ad interim stay in terms of prayer (a)
hereinabove : and
F
(c) pass such other and further orders as may be deemed
just and proper.”
3. The High Court of Delhi vide order dated 25.5.1981, while
issuing notice on the said miscellaneous petitions, granted interim relief
in terms of Prayer clause (a) reproduced above. In furtherance of the G
said interim relief, the appellant furnished an undertaking dated 2/
10.3.1983 in order to secure the payment of differential tax to the
Department of Revenue, Ministry of Finance (for short, ‘the
Department’) in the event of dismissal of its writ petitions. The format
of that undertaking was in conformity with the prescribed undertaking
in Form B-13 referable to Rule 9B of the Rules, submitted by the H
1066 SUPREME COURT REPORTS [2019] 17 S.C.R.
A assessee in the case of provisional assessment. Later on, the High
Court modified the interim relief on 14.5.1985. The relevant portion of
the modified interim relief reads thus: -
“…there will be no stay with regard to future payments. During
the pendency of the Writ Petition, where will be stay in respect
B of 50% of the disputed amount of duties claimed by the
respondents as arrears on the condition that the applicant furnish
Bank Guarantees or renew the Bank Guarantees already
furnished and keep it in force till the disposal of the writ petition.
With regard to the balance of 50% of the arrears of duty which
is disputed, 25% of it shall be paid within 3 months from today.
C With regard to the remaining 25%, the parties will pay the same
in two equal installments of 12½% each in every succeeding
quarter. The 25% payment which is the first payment shall be
made on or before 14th August, 1985, the second installment shall
be made on or before 14th November, 1985 and the third and
D the last installment to complete the 50% will be paid on or before
20th February, 1986.
There arrears of disputed duty which are required to be paid is
only in respect of unsized yarn. Any duty claimed on sized yarn
will not be paid by virtue of this order.
E There will be no duty payable on the sized yarn even for future
till disposal of the writ petition.
If any payments have been made through disputed, the same
would be adjusted in accordance with what is provided in the
order passed by us today……”
F
4. Pursuant to the modified interim relief, the appellant deposited
50% of its liability towards central excise duty in installments and
continued to make future payments. The writ petitions were eventually
disposed of on 10/12.3.1993 in the following terms: -
“Counsel for the parties are agreed that this case is covered by
G
the orders and directions issued by the Supreme Court in Civil
Miscellaneous Petitions No.8869 of 1988 and others in Civil
Appeals Nos.323 of 1984 and others in Rohit Mills Ltd. v. Union
of India, dated 28th April, 1988 and it will be open to the petitioner
to raise such other contention available to it before the adjudicating
H authority in response to the show-cause notices.
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1067
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
Accordingly, we dispose of the writ petition in terms of the A
aforesaid orders of the Supreme Court, which should be read as
part of our order. No order as to costs.”
5. Consequent to the disposal of the writ petitions, the Assistant
Collector of Central Excise vide letter dated 26.3.1993 addressed to
the appellant, informed the appellant that Section 11A of the Central B
Excise Act, 1944 (for short, ‘the Act’) was not applicable to the facts
of the present case. For, the amount was secured by the bank
guarantee furnished by the assessee in terms of the interim order passed
by the High Court of Delhi. Yet an opportunity was offered to the
appellant to send its response. The said letter of the Assistant Collector C
reads as follows: -
“OFFICE OF THE ASSTT. COLLECTOR OF CENTRAL
EXCISE: DIVISION F-I 2 ND FLOOR, MADHU INDUS
ESTATE: P.B. MARG, WORLI, BOMBAY-13
F.No.FI/FI/V(18)-3/81/1735 Bombay, the 26th March, 1993 D
M/s. Bombay Dyeing & Manufacturing Co. Ltd.,
(spring Mills),
G.D. Ambedkar Road,
Bombay-14.
E
Gentlemen,
Sub Delhi High Court CW.P. No.1235/81
M/s. Bombay Dyeing & Mfg. Co. Ltd.
Versus F
Union of India and OTHERS
Please refer to various correspondences exchanged on the above
said state subject.
I have been directed to inform you that the aforesaid case was G
listed on 12.3.93 before Hon’ble the Chief Justice and Hon’ble
Mr. Justice Anil Dev Singh, Delhi High Court, New Delhi.
The aforesaid case is decided in view of the orders passed by
the Supreme Court of India in the case of M/s. Rohit Mills Ltd. (copy
attached herewith for your information and for further action please). H
1068 SUPREME COURT REPORTS [2019] 17 S.C.R.
A Before complying the aforesaid orders of the Supreme Court of
India in case of M/s. Rohit Mills Ltd., on which case the Delhi
High Court has disposed of the instant writ petition, this office
would like to bring to your notice as under:
‘As regards applicability of Section 11A and encashment of Bank
B Guarantee, it is pertinent to refer to the Hon’ble Supreme Court’s
order in Writ Petition No.848 of 1984 filed by M/s. Bhilwara
Processor Ltd. and others, wherein the issue was in dispute i.e.,
whether department can enforce Bank Guarantees executed in
terms of Court’s order without issuing Show Cause cum Demand
Notice under section 11A. In the above case, also, an interim
C order was passed on 20.2.84 by the Hon’ble Supreme Court of
India restraining the department from levying and recovering the
disputed portion of the duty of excise on the condition that
petitioners of the case shall furnish the bank guarantee. The Bank
guarantee was furnished and the writ petition was dismissed by
D the Hon’ble Supreme Court of India on 4.11.88. Thereafter the
department asked the petitioners to take steps to enforce the
Bank guarantee. Aggrieved with this action, they filed a
Miscellaneous Writ Petition before Supreme Court of India stating
that since no Show Cause cum Demand Notice was issued under
Section 11A, no recovery beyond the period of 6 months can be
E effected. The above petition of M/s. Bhilwara Processors Ltd.
was dismissed by Hon’ble Supreme Court of India by its order
dated 29.11.88 (reported in Judgment Today Vol. (4) November
Part 1988 (83) 330).
The similar order was passed by Rajasthan High Court vide order
F dt. 9.12.1988 in C.W.P. No.4441/88. In this case under similar
circumstances, M/s. Modern Suitings also made the same
grievances before Rajasthan High Court. The Hon’ble Rajasthan
High Court placing reliance on the order dt. 29.11.1988 passed
by the Hon’ble Supreme Court of India in the case of
G M/s. Bhilwara Processors Ltd. observed as under:-
“Be that as it may, we are of the opinion that once orders of a
Court, stay order is sought in respect of recovery of Excise Duty
or any other duty for that matter and the stay order is conditional,
on furnishing Bank Guarantee, if ultimately the writ petition is
H dismissed and stay order is vacated, the Bank guarantee can
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1069
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
become encashable immediately. Therefore, we need not go into A
this question as to whether Section 11A is or is not attracted,
we are of the opinion that because the petitioner furnished the
Bank guarantee, makes secured a stay order which was
conditional as a result of which levy and recovery was stayed
once writ petition has been dismissed and the stay order has been
B
dismissed ……. The Bank guarantee has become encashable,
neither it will be proper nor equitable for this Court to say or
make an order that the Bank guarantee should not be
encashed…………..”
With the above observation, we dismiss the writ petition with no C
order as to cost.”
In view of the facts of the case discussed above, the Section
11A is not applicable in the instant case since the amount was
secured by the Bank guarantee furnished by the assessee in
terms of the stay order of Hon’ble Delhi High Court.” D
However, complying the orders given by the Supreme Court of
India in case of M/s. Rohit Mills Ltd., this office would like to
know whether petitioner desires Show Cause cum Demand
Notice to be issued by the respondent i.e., Union of India, for
the recovery of outstanding dues. If yes, the same may be E
confirmed by 31.3.93 so as to enable this office to take the action
as directed by the Hon’ble Supreme Court of India in case of
M/s. Rohit Mills Ltd. However, it will be nothing but the
postponement of payment of Central Excise Duty, which is
legitimate right of the Union of India, which was deprived by you
F
by filing the instant writ petition, since 1981. If no, the consent
letter should be submitted to this office for encashment of Bank
guarantees, as early as possible.
Your early reply is awaited in this matter.
Yours faithfully, G
Sd/- Illegible
(C.K. NIRBHAVANE)
ASSISTANT COLLECTOR
CENTRAL EXCISE DN. FI
BOMBAY-I” H
1070 SUPREME COURT REPORTS [2019] 17 S.C.R.
A 6. The appellant in its response sent on 11.5.1993, asserted that
the Show Cause Notice under Section 11A of the Act was mandatory
and moreso in light of the decision of this Court dated 28.4.1988 in Rohit
Mills Ltd. & Ors. vs. Union of India & Ors. 2 The said
communication reads thus: -
B “OUR RE. NO. SM/E-1 11th May, 1993
The Assistant Collector of Central Excise,
Division F-1, IInd Floor,
Madhu Industrial Estate,
P.B. Marg, Worli,
C Bombay-400013.
Dear Sir,
Your Ref. F.No.IV/CL-VI/30-84/FI/93/2295
Dated 2nd April, 1993.
D Sub: Delhi High Court
Writ Petition No.1235/1981
Bombay Dyeing & Mfg. Co. Ltd.
(Spring Mill Unit) Vs. UOI & Ors.
1. This has reference to your above letter whereby you have
E intimated the date of hearing for finalizing the classification list
in respect of cotton yarn and man made Yarn. Your attention is
also drawn to your earlier letter F.No.FI/PI/V(18)-3/81/1705 dated
26.3.1993, whereby you desired us to intimate whether your would
like a show cause notice to be issued u/s 11A of the Act.
F 2. We would draw your kind attention to the order passed by
the Hon’ble High Court of Delhi dated 10.3.1993 whereby the
above writ petition was disposed of on the basis of the order
passed by the Hon’ble Supreme Court in the case of Rohit Mills
Ltd. For your ready reference, we enclose herewith a copy of
the aforesaid order passed in the case of Rohit Mills.
G
3. The directions issued by the Hon’ble High Court in the above
matter on the basis of the directions issued as in the case of Rohit
Mills contemplate that adjudication has now to be done pursuant
to a Notice under Section 11A of the Act. It is specifically
2
H 1988 (18) ECR 17 SC
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1071
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
directed that in cases where such notice has been not issued, A
the Assistant Collector may issue such notice which should not
go beyond 6 months. In the present case, no show cause notice
under Section 11A has been issued and as such, as per the
direction of the Hon’ble Supreme Court in the case of Rohit Mills
Ltd., which direction also forms part of the order of the Hon’ble
B
High Court disposing also forms part of the order of the Hon’ble
High Court disposing of the above writ petition, your are now
required to issue a Notice under Section 11A of the Act. On
receiving such a notice, we shall raise our objections thereto and
we reserve our right to do so.
4. You have kindly intimated that the hearing in the above matter C
is now fixed for 11.5.1993. We may mention here that before
any hearing is taken up a show cause notice under Section 11A
will have to be first issued and an opportunity be given to us to
reply to the Notice. In this connection we may also mention that
as per the orders of the Hon’ble High Court dated 10.3.1993, D
we have been given specific liberty to raise such other
contentions as are available, before the adjudicating authority in
respect to the show cause notice. We reserve our right to raise
such contention as may be advised, in reply to the said show
cause notice.
E
5. Although our contentions would be raised after the show cause
notice under Section 11A is issued, we may clarify here that, in
any event, no duty of excise is payable in respect of yarn after
it is sized. In other words, duty of excise is not payable on the
basis of the weight of the sized yarn. This has been clearly held
in several decisions including the decision of the Hon’ble Supreme F
Court in the case of J.K. Cotton Spg. & Wvg. Mills Co. Ltd.
and another vs. UOI (1987 (32) ELT 234). The attempt earlier
made to levy duty of excise at the stage after yarn is sized, is
patently illegal in view of the aforesaid decisions. The reference
in your letter to provisional assessment is wholly irrelevant. In G
the first place, as per the directions of the Hon’ble High Court,
adjudication has now to be done on the basis of show cause
notice under Section 11A of the Act. Secondly for the reason
that the provisionally if any, was in relation to dutiablity of yarn
at the stage and the condition after sizing and did not relate to
unsized yarn. In any event, the assessment has now to be done H
1072 SUPREME COURT REPORTS [2019] 17 S.C.R.
A in terms of the directions of the Hon’ble High Court, after issuing
a show cause notice under Section 11A of the Act. The
adjudication can only be gone in accordance with the directions
of the Hon’ble High Court.
6. We may mention here that although our contentions would be
B raised as and when a show cause notice is received, we may
indicate that in any event, no duty of excise is payable in respect
of the yarn obtained at the intermediate stage which is further
processed within the factory, since it is not obtained at that stage
in a marketable condition. We have already paid certain amounts
towards duty of excise in respect of such yarn under protest
C
during the pendency of the writ petition and upon decision of this
issue, we would be entitled to claim refund thereof.
7. Further contentions would be taken in reply to the show cause
notice, which may be issued as per the directions of the Hon’ble
Supreme Court. Under these circumstances, we would request
D
you to first issue a show cause notice under Section 11A of the
Act and then give us an opportunity to file a reply thereto and a
hearing in that respect. The hearing already fixed for 11th May,
1993 may kindly be adjourned since the matter cannot be
adjudicated without issuing a show cause notice under Section
E 11A of the Act as per the directions of the Hon’ble High Court.
Yours faithfully,
Sd/- Illegible
[K.R. NAYAK]
MANAGER”
F
7. The Assistant Collector of Excise vide order-in-original dated
19.8.1993 noted that the appellant had filed classified lists for its products
which had been approved provisionally and the appellant had been
directed to pay excise duty. He also noted the objection of the appellant
about non-issue of a Show Cause Notice under Section 11A of the Act.
G However, he proceeded to finalize the classification lists by noting that
the classification lists filed earlier by the assessee were treated as
provisional.
8. In furtherance of the said order of the Assistant Collector, the
Range Superintendent sent a letter dated 27.9.1993 to the appellant
H stating that all the RT-12 returns for the period of May, 1981 to May,
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1073
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
1985 for the items 18A, 18-III and 18E which had been assessed A
provisionally by the then Range Superintendent are assessed finally. By
the same communication, he called upon the appellant to pay an amount
of Rs.35,92,234.67 (Rupees thirty five lakhs ninety two thousand two
hundred thirty four and sixty seven paise only) pursuant to the order
dated 14.5.1985 passed by the High Court of Delhi. This was followed
B
by a notice dated 7.10.1993 from the Assistant Collector of Central
Excise addressed to the appellant reiterating the position that pursuant
to the interim order passed by the High Court of Delhi, provisional
assessments had been made and necessary endorsements to that effect
were made on the classification lists, monthly RT-12 returns, etc.
Further, the appellant was obliged to make good the arrears of disputed C
duty amounting to Rs.35,96,235/- (Rupees thirty five lakhs ninety six
thousand two hundred thirty five only) for the period starting from
25.5.1981 to 13.5.1985, which had become payable. The appellant was
called upon to pay the said amount within ten days, failing which the
Department would take necessary steps to enforce the bank guarantees
D
and recover the dues from the appellant.
9. Subsequent to the above notice, an opportunity of personal
hearing was also given to the appellant on 19/20.10.1993 with respect
to the recovery of dues. It appears that during the hearing, the appellant
reiterated its stand that the Show Cause Notice under Section 11A of
the Act was essential, including in terms of the order of the High Court E
of Delhi, dated 10/12.3.1993. The Assistant Collector of Excise,
however, vide order-in-original dated 7/15.12.1993, confirmed the
demand of excise duty. He held that in the present case, the duty liability
itself was in dispute and the assessment could be made final only when
the question of duty liability was decided by the High Court of Delhi, F
and once that issue was resolved, the question of issuing notice under
Section 11A of the Act does not arise, especially when the appellant
itself had voluntarily executed B-13 bonds and the assessments were
treated as provisional, as evinced from the endorsements on monthly
RT-12 returns in that behalf.
G
10. The appellant carried the matter in appeal before the
Commissioner of Central Excise (Appeals), who in turn, rejected the
appeal vide order-in-appeal dated 31.5.2000. The Commissioner of
Central Excise (Appeals) also upheld the demand for excise duty and
rejected the plea taken by the appellant regarding the necessity to issue
a Show Cause Notice under Section 11A of the Act. H
1074 SUPREME COURT REPORTS [2019] 17 S.C.R.
A 11. The appellant then unsuccessfully carried the matter in appeal
being Appeal No. E/2747/2000 before the Customs, Excise and Service
Tax Appellate Tribunal (for short, ‘the CESTAT’). That appeal was
dismissed on 22.2.2006. Against that decision, the appellant filed
Central Excise Appeal No. 237/2006 before the High Court of
Judicature at Bombay under Section 35-G of the Act, which was
B
eventually dismissed on 13.9.2007 following the decision of the Division
Bench of the same High Court dated 7.9.2007 in First Appeal No. 2597/
2005 titled as The Jam Shri Ranjitsinghji Spg. & Wvg. Mills Co.
Ltd. & Anr. vs. Union of India & Ors.3.
12. To complete the narration of facts, it is relevant to mention
C that the relied upon decision was assailed before this Court in Civil
Appeal No. 1551/2008 by the assessee therein, which was summarily
dismissed on 7.3.2008, presumably at the admission stage.
13. The sum and substance of the view taken in the relied upon
judgment, which involved similar facts, is that in a case such as this
D where B-13 bonds have been executed by the assessee and clear
endorsement is made on the monthly RT-12 returns that it is a case of
provisional assessment, the question of issuing a Show Cause Notice
under Section 11A of the Act does not arise. The assessee in that case
had relied on the decisions of this Court, which have been distinguished
E as inapplicable to the fact situation of the case under consideration. We
shall advert to the detailed reasons noted in this decision a little later.
14. We may now advert to the issues raised by the appellant in
the present appeal. According to the appellant, primarily two questions
arise for consideration, which are as follows: -
F “1) Whether the demand for Central Excise for the period
25.05.1981 to 14.05.1985, as raised by the department, is barred
by limitation?
This question in turn is dependent upon the issue whether the
assessment in this case could be said to be provisional
G assessment.
2) Could the respondent authorities have ignored the binding
directions of the Hon’ble High Court of Delhi vide its Order dated
12.03.1993 to hold that no Show Cause Notice (SCN) was
3
H 2007 (109) Bom LR 2167
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1075
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
required in the present case as the assessments in question were A
provisional?”
15. It is urged that the purport of the order dated 10/12.3.1993
passed by the High Court of Delhi, while disposing of the writ petitions
filed by the appellant clearly obliged the Department to issue a Show
Cause Notice under Section 11A of the Act and to proceed against the B
appellant only in the manner permissible under the said provision in light
of the dictum of this Court in Rohit Mills Ltd. (supra). It is urged
that the dictum in Rohit Mills Ltd. (supra) formed part of the subject
order of the High Court of Delhi and for which reason, it was not open
to the Department to take a contrary stand. The approach of the
authorities in not complying with the said obligation cannot stand the C
test of judicial scrutiny. On the other hand, if the authorities were to
follow the direction given by the High Court of Delhi, the demand for
central excise duty for the period starting from 25.5.1981 to 13/14.5.1985
would be clearly barred by limitation. It is then urged that had the
authorities adopted the route of provisional assessment, they were D
obliged to expressly state that position by passing an order. In the
present case, no such order has been passed by the authorities. To
buttress the argument that it is incumbent upon the authorities to pass
formal specific order directing provisional assessment, reliance is placed
on the circular issued by the Ministry of Finance (Department of
Revenue) bearing number 26/1989 dated 24.4.1989. It is urged that E
the fact that the appellant had executed B-13 bonds or the monthly RT-
12 returns purportedly treated as provisional assessment, can never be
held against the appellant especially in light of the observation of the
High Court of Delhi that a formal notice be issued to the appellant, which
was the basis for disposing of the writ petitions. In support of the above F
arguments, the appellant would rely on decisions of this Court in Rohit
Mills Ltd. (supra); The Bhopal Sugar Industries Ltd. vs. The
Income Tax Officer, Bhopal4; R.B.F. Rig Corporation, Mumbai vs.
Commissioner of Customs (Imports), Mumbai5; Metal Forgings &
Anr. vs. Union of India & Ors.6; J.K. Cotton Spinning and Weaving
Mills Co. Ltd. vs. Collector of Central Excise7; Commissioner of G
Central Excise, Calcutta vs. Hindustan National Glass & Industries
4
1961 (1) SCR 474
5
(2011) 3 SCC 573
6
(2003) 2 SCC 36
7
(1998) 3 SCC 540 H
1076 SUPREME COURT REPORTS [2019] 17 S.C.R.
A Ltd.8; Kalabharati Advertising vs. Hemant Vimalnath Narichania
& Ors. 9 ; Jagmittar Sain Bhagat & Ors. vs. Director, Health
Services, Haryana & Ors.10; and Coastal Gases and Chemicals Pvt.
Ltd. vs. Assistant Collector of Central Excise, Visakhapatnam &
Ors. 11.
B 16. The respondent, on the other hand, supported the reasons
recorded by the authorities/Tribunal and would contend that being a case
of provisional assessment, the question of issuing a Show Cause Notice
to the appellant under Section 11A of the Act does not arise. Whereas,
the authorities acted as per the mandate of law and proceeded to pass
final assessment orders after the disposal of writ petitions by the High
C Court of Delhi, and before passing such orders, opportunity of hearing
was given to the appellant. According to the respondent, the order dated
10/12.3.1993 of the High Court of Delhi did not create any impediment
for the authorities to proceed against the appellant in accordance with
law. At best, the tenor of the order would suggest that if a Show Cause
D Notice is required to be issued and has not been so issued, authorities
were free to issue such a notice and take decision thereon, after giving
opportunity of hearing to the assessee. No more and no less. The
High Court of Delhi could not have issued any other direction against
the respondent, which would be in the nature of prohibiting the statutory
functionary from discharging its statutory functions and obligations nor
E to absolve the appellant of its statutory obligation to pay excise duty,
which otherwise was payable by the appellant but for filing of the writ
petitions. Admittedly, the interim protection given to the appellant was
conditional and the appellant, acting upon the same, had submitted B-
13 bonds, which pre-supposes that it was a case of provisional
assessment and could be proceeded further as per law, after the disposal
F of the writ petitions. In that, it was not a case referable to Section
11A of the Act. The respondent is placing heavy reliance on the decision
of the Division Bench of the High Court of Judicature at Bombay in
the case of The Jam Shri Ranjitsinghji (supra), which has been
upheld by this Court by dismissing Civil Appeal No. 1551/2008 on
G 7.3.2008. It is urged that the facts of the relied upon case and the
present case are almost similar, if not identical. According to the
respondent, the appeal is devoid of merits and the same be dismissed.
8
(2005) 3 SCC 489
9
(2010) 9 SCC 437
10
(2013) 10 SCC 136
H 11
(1997) 7 SCC 223
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1077
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
17. We have heard Mr. Kavin Gulati, learned senior counsel for A
the appellant and Mr. A.K. Sanghi, learned senior counsel for the
respondent.
18. After cogitating over the rival submissions, the core issue that
requires to be immediately addressed is about the purport of the order
passed by the High Court of Delhi dated 10/12.3.1993, while disposing B
of the writ petitions filed by the appellant. The said order will have to
be understood in the context of the stand taken by the appellant before
the High Court. In the said writ petitions, the appellant had asserted
that the fabric manufactured by the appellant was not amenable to
excise duty as it was not removed from the premises within the meaning
of Rules 9 and 49 of the Rules. Indisputably, the purport of the stated C
Rules has been finally answered by this Court in M/s. J.K. Cotton
Spinning and Weaving Mills Ltd. & Anr. vs. Union of India & Ors. 12
after resolving the conflicting opinions of different High Courts including
of the High Court of Delhi. The stand taken by the appellant in the
writ petition has been negatived by this Court, in the said decision. D
Thus, the question relating to liability to pay excise duty was not and
could not have been disputed by the appellant at least after this decision.
Concededly, the appellant had filed writ petitions taking clue from the
exposition of the High Court of Delhi in J.K. Cotton Spinning &
Weaving Mills Co. Ltd. & Ors. (supra @ F.N.1). That view has
been finally dealt with by this Court in M/s. J.K. Cotton Spinning and E
Weaving Mills Ltd. (supra @ F.N.12), fastening liability on the
assessee to pay excise duty.
19. Additionally, it may be apposite to underscore the purport of
the interim conditional stay granted by the High Court of Delhi whilst
entertaining the writ petitions filed by the appellant. Initially, vide order F
dated 25.5.1981, interim relief was granted in terms of the Prayer clause
(a) of Civil Miscellaneous Petition No. 1699/1981, reproduced hitherto.
By this Prayer clause, the appellant had expressed its willingness to
file undertaking/bond in Form B-13 referable to Rule 9B supported by
bank guarantee for an amount equivalent to specified differential duty G
in respect of the yarn in question. The said interim relief was then
modified on 14.5.1985. The fact remains that the appellant voluntarily
furnished requisite bonds in Form B-13 referable to Rule 9B supported
by bank guarantee for equivalent amount of the differential duty. It is
12
1987 (Supp) SCC 350 H
1078 SUPREME COURT REPORTS [2019] 17 S.C.R.
A not an undertaking filed pursuant to the order of the Court. Concededly,
the order disposing of the writ petitions does not absolve the appellant
from the said bonds; nor the endorsements made thereon and on the
monthly RT-12 returns, indicating that it was a provisional assessment
have been ordered to be effaced. Suffice it to observe that the order
dated 10/12.3.1993 passed by the High Court of Delhi, disposing of the
B
writ petitions filed by the appellant in no way extricate the appellant
from the process to which the appellant had voluntarily submitted itself
at its own volition, namely, under Rule 9B of the Rules. Thus, it was
not a case of duty not levied or not paid or short-levied or short-paid.
The understanding of the parties was absolutely clear that the appellant
C was liable to pay excise duty, but for the exposition of the High Court
of Delhi in J.K. Cotton Spinning & Weaving Mills Co. Ltd. & Ors.
(supra @ F.N.1). Understood thus, the appellant is obliged to fulfill
its statutory obligations including those arising from the undertaking/bonds
in Form B-13 and cannot resile from the process to which it had
submitted itself without any demur, namely under Rule 9B of the Rules.
D
20. Indeed, the High Court of Delhi while disposing of the writ
petitions vide order dated 10/12.3.1993, had adverted to the decision
of this Court in Rohit Mills Ltd. (supra). On a fair reading of that
decision, it is obvious that the Court dealt with two situations referred
to therein. First, where Show Cause Notices under Section 11A of
E the Act have been served and the claim does not cover any period
beyond six months from the date of receipt of the notices. Second,
where there is dispute as to whether the notice under Section 11A had
been issued or not. In the present case, none of the above is attracted;
and for the same reason the exposition in paragraphs 30 to 33 of M/s.
F J.K. Cotton Spinning and Weaving Mills Ltd. (supra @ F.N.12),
on which reliance has been placed by the appellant, would be of no
avail to the appellant.
21. Section 11A of the Act as applicable at the relevant time,
would apply to cases of recovery of duties not levied or not paid or
G short-levied or short-paid etc. The Section, as applicable at the relevant
time, read thus: -
“11A.Recovery of duties not levied or not paid or short-levied
or short-paid or erroneously refunded. -
(1) When any duty of excise has not been levied or paid or has
H been short-levied or short-paid or erroneously refunded, whether
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1079
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
or not such non-levy or non-payment, short-levy or short payment A
or erroneous refund, as the case may be, was on the basis of
any approval, acceptance or assessment relating to the rate of
duty on or valuation of excisable goods under any other provisions
of this Act or the rules made thereunder, a Central Excise Officer
may, within one year from the relevant date, serve notice on the
B
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:
Provided that where any duty of excise has not been levied or
paid or has been short-levied or short-paid or erroneously C
refunded by reason of fraud, collusion or any wilful mis-statement
or suppression of facts, or contravention of any of the provisions
of this Act or of the rules made thereunder with intent to evade
payment of duty, by such person or his agent, the provisions of
this sub-section shall have effect, as if for the words one year, D
the words “five years” were substituted:
Explanation .—Where the service of the notice is stayed by an
order of a Court, the period of such stay shall be excluded in
computing the aforesaid period of one year or five years, as the
case may be. E
(1A) When any duty of excise has not been levied or paid or
has been short-levied or short paid or erroneously refunded, by
reason of fraud, collusion or any wilful misstatement or
suppression of facts, or contravention of any of the provisions
of this Act or the rules made thereunder with intent to evade F
payment of duty, by such person or his agent, to whom a notice
is served under the proviso to sub-section (1) by the Central
Excise Officer, may pay duty in full or in part as may be accepted
by him, and the interest payable thereon under section 11AB and
penalty equal to twenty-five per cent. of the duty specified in
the notice or the duty so accepted by such person within thirty G
days of the receipt of the notice.
(2) Central Excise Officer shall, after considering the
representation, if any, made by the person on whom notice is
served under sub-section (1), determine the amount of duty of
excise due from such person (not being in excess of the amount H
1080 SUPREME COURT REPORTS [2019] 17 S.C.R.
A specified in the notice) and thereupon such person shall pay the
amount so determined:
Provided that if such person has paid the duty in full together
with, interest and penalty under sub-section (1A), the proceedings
in respect of such person and other persons to whom notice is
B served under sub-section (1) shall, without prejudice to the
provisions of sections 9, 9A and 9AA, be deemed to be
conclusive as to the matters stated therein:
Provided further that, if such person has paid duty in part, interest
and penalty under sub-section (1A), the Central Excise Officer,
C shall determine the amount of duty or interest not being in excess
of the amount partly due from such person.
(2A) Where any notice has been served on a person under sub-
section (1), the Central Excise Officer,—
(a) in case any duty of excise has not been levied or paid
D or has been short-levied or short-paid or erroneously
refunded, by reason of fraud, collusion or any wilful
misstatement or suppression of facts, or contravention
of any of the provisions of this Act or of the rules made
thereunder with intent to evade payment of duty, where
E it is possible to do so, shall determine the amount of such
duty, within a period of one year; and
(b) in any other case, where it is possible to do so, shall
determine the amount of duty of excise which has not
been levied or paid or has been short-levied or short-
F paid or erroneously refunded, within a period of six
months, from the date of service of the notice on the
person under sub-section (1).
(2B) Where any duty or excise has not been levied or paid or
has been short-levied or short-paid or erroneously refunded, the
person, chargeable with the duty, may pay the amount of duty on
G
the basis of his own ascertainment of such duty or on the basis
of duty ascertained by a Central Excise Officer before service
of notice on him under sub-section (1) in respect of the duty, and
inform the Central Excise Officer of such payment in writing,
who, on receipt of such information shall not serve any notice
H under sub-section (1) in respect of the duty so paid:
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1081
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
Provided that the Central Excise Officer may determine the A
amount of short payment of duty, if any, which in his opinion has
not been paid by such person and then, the Central Excise Officer
shall proceed to recover such amount in the manner specified in
this section, and the period of “one year” referred to in sub-
section (1) shall be counted from the date of receipt of such
B
information of payment.
Explanation 1. —Nothing contained in this sub-section shall apply
in a case where the duty was not levied or was not paid or was
short-levied or was short-paid or was erroneously refunded by
reason of fraud, collusion or any wilful mis-statement or C
suppression of facts, or contravention of any of the provisions
of this Act or of the rules made thereunder with intent to evade
payment of duty.
Explanation 2. —For the removal of doubts, it is hereby declared
that the interest under section 11AB shall be payable on the D
amount paid by the person under this sub-section and also on
the amount of short-payment of duty, if any, as may be
determined by the Central Excise Officer, but for this sub-section.
Explanation 3 .—For the removal of doubts, it is hereby declared
that no penalty under any of the provisions of this Act or the E
rules made thereunder shall be imposed in respect of payment
of duty under this sub-section and interest thereon.
(2C) The provisions of sub-section (2B) shall not apply to any
case where the duty had become payable or ought to have been
paid before the date on which the Finance Bill, 2001 receives F
the assent of the President.
(3) For the purposes of this section—
(i) “refund” includes rebate of duty of excise on excisable
goods exported out of India or on excisable materials
used in the manufacture of goods which are exported G
out of India;
(ii) “relevant date” means,—
(a) in the case of excisable goods on which duty of excise has
not been levied or paid or has been short-levied or short-paid— H
1082 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (A) where under the rules made under this Act a periodical
return, showing particulars of the duty paid on the
excisable goods removed during the period to which the
said return relates, is to be filed by a manufacturer or a
producer or a licensee of a warehouse, as the case may
be, the date on which such return is so filed;
B
(B) where no periodical return as aforesaid is filed, the last
date on which such return is to be filed under the said
rules;
(C) in any other case, the date on which the duty is to be
C paid under this Act or the rules made thereunder;
(b) 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;
(c) in the case of excisable goods on which duty of excise has
D
been erroneously refunded, the date of such refund.”
22. The case at hand, however, would come within the
dispensation predicated by Rule 9B of the Rules, which deals with
provisional assessment to duty. The same reads thus:-
E “Rule 9B. Provisional assessment to duty.- (1)
Notwithstanding anything contained in these rules,-
(a) where the proper officer is satisfied that an assessee is
unable to produce any document or furnish any
information necessary for the assessment of duty on any
F excisable goods; or
(b) where the proper officer deems it necessary to subject
the excisable goods to any chemical or any other test
for the purpose of assessment of duty thereon; or
(c) where an assessee has produced all the necessary
G
documents and furnished full information for the
assessment of duty, but the proper officer deems it
necessary to make further inquiry (including the inquiry
to satisfy himself about the due observance of the
conditions imposed in respect of the goods after their
H removal) for assessing the duty;
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1083
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
the proper officer may, either on a written request made by the A
assessee or on his own accord, direct that the duty leviable on
such goods shall, pending the production of such documents or
furnishing of such information or completion of such test or
enquiry, be assessed provisionally at such rate or such value
(which may not necessarily be the rate or price declared by the
B
assessee) as may be indicated by him, if such assessee executes
a bond in the proper form with such surety or sufficient security
in such amount, or under such conditions as the proper officer
deems fit, binding himself for payment of the difference between
the amount of duty as provisionally assessed and as finally
assessed. C
(2) xxx xxx xxx
(3) The Collector may permit the assessee to enter into a general
bond in the proper form with such surety or sufficient security
in such amount or under such conditions as the Collector
approves for assessment of any goods provisionally from time D
to time:
Provided that, in the event of death, insolvency or insufficiency
of the surety or where the amount of the bond is inadequate,
the Collector may in his discretion demand a fresh bond and may,
if the security furnished for a bond is not adequate, demand E
additional security.
(4) The goods provisionally assessed under sub-rule (1) may be
cleared for home consumption or export in the same manner as
the goods which are not so assessed.
F
(5) 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.” G
23. Indisputably, the appellant voluntarily executed bonds in Form
B-13 referable to Rule 9B of the Rules and also furnished bank
guarantee for an amount equivalent to the differential amount of duty
in respect of the fabric in question. The authorities have made
endorsements on the bonds and on the monthly RT-12 returns filed by H
1084 SUPREME COURT REPORTS [2019] 17 S.C.R.
A the assessee, indicating that it was a case of provisional assessment.
Having submitted to that process, it is not open to the appellant to urge
that an express order of provisional assessment has not been passed
by the authorities.
24. Be that as it may, the stand taken by the parties as recorded
B in the order dated 10/12.3.1993, is limited to accepting the fact that if
notice is required to be given, the same will be given and in that case
it will be open to the appellant to file response thereto and further, the
authorities would take decision after giving opportunity to the assessee.
Nothing more can be read into the order dated 10/12.3.1993 passed by
the High Court of Delhi. It is certainly not an order to undo the obligation
C
accepted by the assessee by voluntarily executing the bonds in the
prescribed format, namely, Form B-13 referable to Rule 9B of the Rules
- to treat the process as provisional assessment until the disposal of
the writ petitions. It is also noticed that the authorities have later on
passed the final order after the disposal of the writ petitions.
D
25. A priori, the authorities have not violated any stipulation or
direction contained in the order dated 10/12.3.1993 passed by the High
Court of Delhi and for having proceeded in accordance with law for
the period between 25.5.1981 to 13/14.5.1985.
26. Reverting to the decision of the Division Bench of the High
E
Court of Judicature at Bombay in The Jam Shri Ranjitsinghji (supra),
similar argument was considered and the High Court, after detailed
analysis, concluded that in a case such as the present one, it is not open
to the assessee to insist for a notice under Section 11A of the Act, which
has no bearing in cases of provisional assessment. The High Court of
F Judicature at Bombay, while dealing with similar arguments, observed
thus:-
“33. The question, therefore, to be considered is, firstly, whether
circumstances for making provisional assessment existed in the
present case and secondly, whether a provisional assessment
G order was made before clearance of the yarn for captive
consumption?
34. With reference to the first contention, the argument of the
appellant is that none of the circumstances for making provisional
assessment set out in Rule 9B existed in the present case.
H Moreover, classification list and the price list were already
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1085
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
approved, and therefore, there was no scope for making A
provisional assessment. There is no merit in this contention
because under Rule 9-B(1)(c) of the 1944 Rules, even after the
assessee has produced all the necessary documents and furnished
full information for the assessment of duty it was open to the
assessing officer to make provisional assessment either on a
B
written request made by the assessee or if the proper officer
deemed it necessary to make further inquiry. In the present case,
admittedly there was a dispute pending before the Delhi High
Court regarding the excisability of the yarn cleared for captive
consumption. Pending final decision of the Delhi High Court, it
was open to the appellant to seek and to the proper officer to C
allow clearance of yarn for captive consumption on provisional
assessment basis. In fact, in the B-13 Bond it is recorded that
the appellant had sought provisional assessment. Even if the
contention of the appellant that the B-13 Bond was executed at
the instance of the excise authorities, is accepted, in view of the
D
fact that a dispute was pending before the Delhi High Court, it
was open to the proper officer to insist on clearing the yarn for
captive consumption on provisional assessment basis.
35. The next question to be considered is, whether a provisional
assessment order was in fact made before clearance of yarn for
captive consumption on provisional assessment basis? It is not E
in dispute that during the period from May, 1981 to May, 1984
the appellant had cleared the yarn for captive consumption by
executing B-13 Bond which is applicable to provisionally assessed
goods. It is pertinent to note that the Delhi High Court by its
interim order had not directed the appellant to execute B-13 F
Bond. Apart from B-13 Bond, there are various types of Bonds
specified in Appendix I to the 1944 Rules, which could be
executed by the appellant. The fact that the appellant claims to
have executed the B-13 Bond at the instance of the revenue
clearly shows that as per the directions given by the proper officer,
the clearances have been effected on provisional assessment basis G
by executing B-13 Bond.
36. It is not the case of the appellant that B-13 bond was
executed inadvertently or by mistake. Therefore, having
consciously cleared the yarn for captive consumption on
provisional assessment basis by executing B-13 Bond as directed H
1086 SUPREME COURT REPORTS [2019] 17 S.C.R.
A by the excise authorities, it is not open to the appellant to contend
that there was no order/directions to clear the yarn on provisional
assessment basis.”
27. The decisions of this Court, to which our attention has been
invited by the learned counsel for the appellant, have been considered
B by the High Court of Judicature at Bombay. The High Court rightly
observed that the said decisions have no application to case of
provisional assessment followed by a final assessment. While dealing
with those decisions, the Court observed thus:-
“39. At the outset, it may be noted that the observations made
C by the Apex Court in all the above cases regarding the issuance
of notice under Section 11-A of the 1944 Act was in the context
of the excise duty that became payable on account of the Apex
Court upholding the validity of the amendment to Rule 9 and 49
of the 1944 Rules with retrospective effect from 28.2.1944.
Obviously, the said observations were meant to apply to cases
D
where the final assessments were already made and not in
respect of cases where the assessments were provisional,
because duty liability is determined only at the time of final
assessment. In other words, what is held in all the above cases
is that, in spite of the retrospective amendment to Rule 9 and 49
E is upheld, where the assessments are already finalised the duty
under the amended Rule 9 and 49 can be recovered only by
issuing notice under Section 11A of the 1944 Act.
40. This is evident from the fact that in the case of J.K. Cotton
Mills (supra) in respect of the clearances effected during the
F pendency of the dispute, there was no direction to clear the goods
on provisional assessment basis. In that case, neither the goods
were cleared by executing B-13 Bond nor there were any
endorsements made on the RT-12 returns to the effect that the
assessments were provisional. Moreover, in the show cause
notice issued by the revenue it was not even averred that the
G
goods were cleared on provisional assessment basis. In fact,
Assistant Collector in that case treated the assessments as
provisional solely on the premise that the matter was subjudice
and the basic argument of the revenue was that the stay granted
by the Delhi High Court virtually amounted to stay of service of
H notice under Section 11-A of the Excise Act. In the facts of that
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE 1087
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
case, where the assessments had attained finality and where A
there was no evidence whatsoever to establish that the
clearances were effected on provisional assessment basis, the
Apex Court held that in the absence of an express order of
provisional assessment made under Rule 9B, the assessments
cannot be treated as provisional.”
B
28. As noticed earlier, this decision of the High Court of Judicature
at Bombay was assailed by the assessee before this Court by way of
Civil Appeal No. 1551/2008, which came to be summarily dismissed
on 7.3.2008. We are conscious of the fact that this Court had
summarily dismissed the said appeal. Nevertheless, the view expressed
by the High Court of Judicature at Bombay, as reproduced above, C
commends to us.
29. The appellant had placed emphasis on the decision in The
Bhopal Sugar Industries Ltd. (supra) and R.B.F. Rig Corporation,
Mumbai (supra) to contend that the Department cannot be permitted
to take contrary position than the direction given by the High Court of D
Delhi. For the reasons indicated hitherto, in our opinion, the basis of
this submission is ill-founded. The authorities have not been nor could
be prohibited by the High Court of Delhi from proceeding with the
matter in accordance with law. In the present case, all that the
authorities have done is to follow the procedure consequent to E
provisional assessment, by passing a final order and raising demand on
the basis of that order. The appellant, as a matter of fact, in terms of
the conditional interim order is obliged to discharge its obligation in terms
of the bonds executed in Form B-13 and the monthly RT-12 returns
filed from time to time for the relevant period.
F
30. It is not necessary for this Court to dilate on the other
observations in the decision of the High Court of Judicature at Bombay
in The Jam Shri Ranjitsinghji (supra). For the same reason, it is
not necessary for us to deal with the exposition in Metal Forgings
(supra). That decision has been pressed into service to assail the
finding of the Commissioner of Central Excise (Appeals), who had G
observed that the order passed to finalize the assessment based on the
RT-12 returns itself be treated as Show Cause Notice. It is not
necessary to dilate further on this aspect.
31. Similarly, the exposition of this Court in Metal Forgings
(supra) and Hindustan National Glass & Industries Ltd. (supra) H
1088 SUPREME COURT REPORTS [2019] 17 S.C.R.
A to urge that specific order was required to be passed before an
assessment is treated as a provisional assessment, will be of no avail
considering the execution of bonds in Form B-13 by the appellant-
assessee at its own volition, which is referable to provisional assessment
procedure under Rule 9B of the Rules. Once the appellant submitted
itself to that procedure without any demur pending disposal of the writ
B
petitions, it is not open to later on resile therefrom. Permitting the
assessee to do so, would inevitably result in giving undue advantage
and favour to the assessee, who had invoked the remedy under Article
226 of the Constitution of India and sought interim protection on offering
to execute bonds in Form B-13 as is noted in the Prayer clause (a) of
C the civil miscellaneous petition(s). For the same reason, the circular
issued by the Government of India pressed into service will be of no
avail to the appellant. Further, the decisions in Kalabharati Advertising
(supra) and Jagmittar Sain Bhagat (supra) will also be of no avail
to the appellant. For, the appellant had voluntarily executed the bonds
and also filed monthly RT-12 returns, on which endorsement had been
D
made indicative of being a provisional assessment.
32. Taking overall view of the matter, we are of the considered
opinion that the appellant cannot be allowed to approbate and reprobate
- for inviting the High Court of Delhi to pass interim order stipulating
that the appellant would execute bonds in Form B-13 referable to Rule
E 9B of the Rules and continue to file monthly RT-12 returns from time
to time, on which endorsements have been made indicating that it is a
case of provisional assessment. The appellant cannot now be permitted
to urge that it had not submitted to the process of provisional assessment
as such for lack of a specific order of the concerned authority in that
F behalf. The order passed by the High Court of Delhi on 10/12.3.1993,
will have to be understood in proper perspective and not to give undue
advantage to or bestow favour on the appellant and thereby deprive
the legitimate State exchequer.
33. Resultantly, this appeal deserves to be dismissed and the same
G is accordingly dismissed with no order as to costs. Pending interlocutory
applications, if any, shall stand disposed of.
Divya Pandey Appeal dismissed.
H
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