DINESH MILLS LIMITED Vs. UNION OF INDIA
HIGH COURT OF GUJARAT
SHRI DINESH MILLS LTD., BARODA
UNION OF INDIA
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(1.)* * * *
(2.)IT is not disputed that in consequence of the order passed by the Assistant Collector the notices were issued to the plaintiff under Rule 10 of the Rules (Central Excise Rules 1944 demanding the duty found due from it as indicated in that order. In this connection it is argued by the learned Advocate General that the excise authorities were not justified in issuing the notice of demand under Rule 10-A of the Rules as according to him in the present case Rule 10 was applicable. The above rules provide as under:
"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 pay 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-A. 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 duty has for any reason been short levied or of any other sum of any kind payable to the Central Government under the Act or these 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."
The above Rules have been interpreted in some cases by the Supreme Court. The learned Advocate General however relies on the decision in the case of N. B. Sanjana v. E. S. & W. Mills A.I.R. 1971 S. C. 2039. According to the learned Advocate General the goods were brought by the plaintiff company from the Standard Weaving Factory with the permission of the Collector of the Central Excise and he had already exempted the goods in question from payment of duty. For subsequent years also full duty was not charged on the ground that the goods in question were not manufactured by the plaintiff. Under these circumstances the Assistant Collector had no jurisdiction to re-open the question and in case it is held that he had jurisdiction to do so the notice demanding duty should have been issued under Rule 10 of the Rules. In this connection we have already pointed out that while granting the permission the Collector had made it clear that it was being granted subject to certain conditions. One of the conditions was that the company had to produce necessary evidence to the satisfaction of the proper officer that the fabrics were in fact exempted from payment of excise duty. As pointed out by the Assistant Collector in his order it was subsequently found that the plaintiff had obtained the above permission by misrepresentation and concealing certain facts. Under these circumstances the Assistant Collector was not precluded from making a proper inquiry into the matter when it came to his notice that the plaintiff had supressed certain facts and in this connection we have already held that the Assistant Collector had power to do so and the civil court had no jurisdiction to interfere with the matter. As regards the submission of the learned Advocate General that it is rule 10 which is applicable it may be pointed out that in the present case it was not because of any inadvertence error collusion or misconstruction on the part of the officer or through some misstatement as to the quantity description or value of such goods on the part of the owner or any other circumstances enumerated in the rule that duty had been short-levied. According to the Assistant Collector the fact that the plaintiff had suppressed material facts and made representation which was not true was detected at a later stage and hence he proceeded to pass the appropriate order in the matter under rule 9 of the Rules and after he passed the order in question notices of demand were issued under rule 10A of the Rules. This shows that rule 10 is not applicable to the facts of this case. In this connection we may point out that according to rule 10 a written demand is to be 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. The above provision as to the period within which the demand is to be made also makes it clear that rule 10 would not be applicable to the cases where no duty or charge was levied or such duty or charge was short levied as a result of misrepresentation or suppression of material facts on the part of the person liable to pay duty. If it is held that rule 10 is applicable even to such cases the persons omitting to pay duty by resorting to questionable means as in the present case would succeed forever in avoiding their liability to pay the duty according to the Rules in case the fact that they had suppressed certain facts or made misrepresentation in the matter is not detected within the period of 3 months as contemplated by rule 10. IT appears that it is in order to ensure that such persons do not succeed in avoiding to pay duty by resorting to questionable methods that rule 10 has been framed. All the above questions were not before their Lordships of the Supreme Court in the case of N. B. Sanjana (supra) in which it has been held:
"In order to attract R 10 it is not necessary that some amount of duty ought to have been assessed and that amount ought to have been also actually paid. This rule applies to a case where there has been a nil assessment in which case entire duty later on assessed must be considered to be duty originally short levied. R. 10A does not apply to such a case. "
The decision in the above case would not therefore be applicable to the case before us. In our view the decision in the case of Assistant Collector C.E. v. N.T. Co. of India Ltd. A.I.R. 1972 S. C. 2563 would be applicable to the case before us. Appeal dismissed.
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