Bhimaji Narayanrao Lokur, J. - (1.) The petitioner, Shyam Glass Works, Sasni are manufacturers of glass phials and bottles and are required to pay central excise duty on the manufacture of the aforesaid articles. The duty is calculated after deduction of discount paid to the customers. The petitioner had agreed to pay 6.4 per cent discount on sales of and above Rs. 200/ - to customers in Uttar Pradesh and a like discount on sales of and above Rs. 500/ - to the customers out of Uttar Pradesh. A price list on the above basis was submitted to the Central Excise Department for the period 1st July, 1962 to 30th June, 1963, and the said list which mentioned the aforesaid terms of discount was approved by the Superintendent of Central Excise. Bills for excise duty were accordingly made by the excise authorities and paid off by the petitioner. However, the Central Excise Inspector sent a notice of demand of additional duty from the petitioner on the 29th June, 1966 on the ground that the duty was short -levied as the petitioner was not entitled to any deduction of discount since the discount offered to the customers was not uniform. The demand was contested by the petitioner, who, however, lost before the Asstt. Collector, the Collector as well as the Government of India. The petitioner by this petition has challenged the additional levy on the ground, firstly, that the discount offered by them as aforesaid is uniform and accordingly there was no short -levy and, secondly, that the recovery of the short -levy, if any, is barred by lapse of time. The concession of deduction for discount is given only where the discount is uniform. It is clear that the scheme of discount framed by the petitioner is not uniform. The customers in Uttar Pradesh are given 6.4 per cent discount for sales of and above Rs. 200/ - while the discount for the customers outside Uttar Pradesh is at the same rate provided the sales are of and above Rs. 500/ -. There is uniformity in the case of customers in Uttar Pradesh as well as in the case of customers outside Uttar Pradesh but there is no uniformity in the case of customers outside Uttar Pradesh vis -a -vis the customers in Uttar Pradesh. The petitioner was clearly not entitled to the deduction of discount given to the customers in a manner which is not uniform.
(2.) However, the recovery of short -levy is not permissible at this late stage. The demand is u/R. 10 of the Central Excise Rules. Under that rule the short levy can be recovered within three months of the date on which the duty was paid, if the short levy was due to inadvertence, error, collusion or misconstruction on the part of the officers. The petitioner has sworn an affidavit that the duty charged to them was paid long before the demand notice dated 29th June, 1965. The receipts were produced for inspection by the court and by the Central Government counsel and they show that the payments of the duty were made in 1962 and 1963. That being so, the short levy cannot be recovered u/R. 10. The learned Central Government Counsel, however, contended that the short levy is recoverable u/R. 10 -A and any deficiency in duty in the event of short levy can be recovered without limitation of time but only in those cases where the Central Excise Rules do not make any specific provision for the collection of the deficiency in duty. The power u/R. 10 -A is a residuary power which has to be exercised in cases not falling within R. 10. If any short levy is due to circumstances mentioned in R. 10, the deficiency has to be recovered u/R. 10 and not u/R. 10 -A. In the present case, the short levy is entirely due to an error and could be recovered u/R. 10 only and not u/R. 10 -A. As the recovery of the short levy u/R. 10 has to be made within three months of the payment of the duty, the demand notice made years after the payment of duty is clearly illegal and deserves to be quashed. Accordingly, the demand notice directed against the petitioner, Annexure B to the petition, is hereby quashed. No order as to costs.;