MAFATLAL INDUSTRIES LTD Vs. COLLECTOR C EX AND CUS

JUDGEMENT

(1.) THE aforesaid appeals arise out of the orders of the Collector (Appeals) listed above against each. All these appeals arise out of the common issue excepting some minor variations which are discussed individually and hence they were heard together and we propose to dispose of through this common order. It is needless to elaborate the facts of the case in detail. THE appellants manufacture cotton yarn, non-cellulosic spun yarn and cellulosic yarn and they consume these varieties of yarn captively in the manufacture of fabrics. THEy had been paying duty on these yarn captively consumed in the manufacture of fabrics till the Delhi High Court in its judgment dated 16-10-80 reported in 1981 ELT 887 allowed the Writ Petition challenging the levy of Central Excise duty on yarn captively consumed in the manufacture of fabrics. THEreafter, the appellants stopped paying duty on yarn captively consumed. THE department have taken up the matter by way of SLP before the Supreme Court [It is reported to be still pending). THE Government carried out an amendment in Rules 9 & 49 of the Central Excise Rules by way of Notfn. No. 20/82-C.E., dated 20-2-1982 to the effect that for the purpose of removal, goods removed for captive consumption should also be deemed to be removal. This Notification dated 20-2-1982 was given retrospective effect through Section 51 of the Finance Act, 1982, which received the President's assent on 11-5-82. THE retrospective validity of Section 51 of the Finance Act was challenged before the Delhi High Court and later before the Supreme Court and both the Delhi High Court and the Supreme Court upheld the validity of Section 51 of the Finance Act but held it subject to the provisions of Section 11-A of the Central Excises & Salt Act, 1944. THE Supreme Court judgment is reported in 1989 (23) ECR 178 (SC) in the case of M/s. J.K, Spinning & Wvg. Mills Ltd. Following the ratio of the judgment in M/s. J.K. Spinning & Wvg. Mills Ltd. the Supreme Court also vacated the interim stay and finally disposed of the writ petitions filed by these appellants with the directions that in cases where notices under Section 11-A of the Central Excises & Salt Act have been served and the claims do not cover for any period beyond six months from the respective dates of the notices, the department would be entitled to realise the dues. THE Supreme Court also directed that, in cases of dispute as to whether the notices under Section 11-A had been issued or not, the Asstt. Collector will decide the issue. THE Supreme Court's order was that in cases where notices are yet to be issued, the department would be entitled to do so but the same should not go beyond six months. THE Supreme Court also directed for deciding this limited question by giving suitable opportunities to the appellants before passing the orders. In pursuance of this direction, the Asstt. Collector, after complying with the principles of natural justice passed orders confirming the demands issued on the basis of the show cause notices, against which appeals were filed before the Collector (Appeals). THE Collector (Appeals) passed the aforesaid impugned orders rejecting the appeals and confirming the demands. THE present appeals are against the aforesaid orders of the Collector (Appeals).

(2.) The major issue to be decided in all these appeals is whether the demands issued are valid and are within the time limit prescribed under Section 11-A. In all these cases, the undisputed facts are that notices have been issued before 20-2-1982 under Section 11-A within the period of six months, and only in the case of M/s. Rohit Mills, 3 show cause notices are contested as beyond six months for the month of June, 1982 involving a sum of Rs. 4,29,576, where the demand made for the month of June, '82 was beyond the period of six months from the date of show cause notice dated 5-1-1983. In all these three cases of the appellants M/s. Rohit Mills Ltd. (Appeal No. E/769/89) RT-12 returns were filed on 3-12-1982 and hence the demands for the month of June 1982 covered by the show cause notices dated 5-1-1983 are stated to be beyond the period of six months. In the case of appellants M/s. Ahmedabad Advance Mffls (A.No. E/366/89-Bom) and M/s. Maheshwari Mills Ltd. (A.No. E/367/89-Bom) contentions were raised that there were no regular notices under Section 11-A for covering certain periods, but endorsements were made on the RT-12 at the time of completion of the assessment pointing out the short-levy. The disputed amount in the case of M/s. Maheshwari Mills Ltd. is Rs. 7,49,357.22 and Rs. 8,23,180.60 in the case of M/s. Ahmedabad Advance Mills. Barring the cases in the aforesaid 3 appeals, where the demands during the disputed period are to be considered separately, in all the other cases, the admitted position is that the demands have been issued within a period of six months as laid down under Section 11-A.

(3.) IN the case of M/s. Rohit Mills Ltd. the appellants moved a stay application along with their appeal on 12-12-1989. The said appeal was also heard waiving the pre-deposit, since the issue is identical. During the hearing on 12-12-1989, Shri Nanavati, the learned advocate along with Shri Bhatt appeared for hearing. Shri Nanavati submitted that the SLP filed by M/s. J.K. Spinning & Wvg. Mills against the decision of the Special Bench 'D' of the Tribunal at Delhi reported in 1989 (23) ECR 385, has been admitted by the Supreme Court and certain interim direction has been given. He, however, could not produce any copy of the interim direction nor could he categorically confirm about the direction given in that case. He also could not state whether the decision of the 'D' Bench has been stayed by the Hon'ble Supreme Court. He further pleaded that there are certain distinguishing features on facts in these appeals vis-a-vis the case decided by the 'D' Bench of the Tribunal. IN view of the aforesaid position, we are of the view that there is no purpose in postponing the final hearing of these appeals and expressed that since he contends that the facts of these appeals are distinguishable from the facts, on the basis of which decision has been given by the 'D' Bench, the appeals are to be beared without any further adjournment. Thereupon, Shri Nanavati agreed to proceed with the arguments on the appeals.