ASIAN PAINTS INDIA LTD Vs. COLLECTOR OF C EX

JUDGEMENT

(1.) FOR hearing the applicants' appeal on merits, they are required to deposit a sum of Rs. 1,60,78,525.84/-.

(2.) Shri Seervai, the learned senior advocate, on behalf of the applicants stated that during the period from 1978-83 covered by the demand, they were paying duty declared on the basis of the manufacturing cost plus manufacturing profit as per the verdict of the various High Courts. The assessments were provisional during the material periods. Subsequently, on the pronouncement of the decision of the Hon'ble Supreme Court in the case of Bombay Tyre International, proceedings were initiated for finalisation of the provisional assessments. The initial order passed by the Asstt. Collector was set aside by the Collector (Appeals) who remanded the matter for de novo consideration, whereupon the Asstt. Collector issued a notice for de novo adjudication on 6-4-1984 and by his order dated 15-10-1984, the Asstt. Collector allowed 7 items of deductions as admissible discounts but disallowed 3 items. In pursuance of this order, the Asstt. Collector also confirmed a demand for an amount of Rs. 5.90 crores. This amount was paid under protest on 31-3-1985. The Department also had issued a certificate of payment vide their letter dated 11-7-1985. The applicants went in appeal before the Collector (Appeals) challenging the disallowance of 2 items of deductions by the Asstt. Collector. This appeal was filed by them on 7-1-1985. However, on 11-10-1985, the Collector of Central Excise, Bombay-Ill, in exercise of powers conferred under Section 35-E, directed for review of the order of the Asstt. Collector dated 15-10-1984 and in pursuance of this order of the Collector, an appeal by the department came to be filed on 2-12-1985 seeking for setting aside the order of the Asstt. Collr. and for holding that certain deduction allowed by the Asstt. Collr. are not legally correct. In their cross objections to the appeal by the department, the applicants raised a preliminary objection stating that the appeal was hit by time bar inasmuch as no demand for the short levy alleged had been issued within the period of six months from the relevant date, which is the mandatory requirement as per the second proviso to Section 35A(3) of the Central Excises & Salt Act. However, this preliminary objection has not been considered by the Collector (Appeals) and he has not taken it as one of the points required to be considered. The learned Sr. advocate also contended that even as per the Section 35-A (4), the points for determination ought to be set out and the Collector (Appeals) was required to give a decision thereon. He also contended that wherever there is a case of short levy or erroneous refund, proceedings initiated under Section 35-E are required to adopt the procedure envisaged under Section 35-A. because as a result of the review done under Section 35-E, an appeal comes to be filed before the Collector (Appeals). Shri Seervai also contended that he does not have any dispute in this case with regard to the fact that the appeal has been filed within the time of one year prescribed under Section 35-E. His only point is that this is an appeal filed by the department and when considering this appeal the Collector (Appeals) is required to dispose it of in a manner prescribed under Section 35-A, which contemplates that in the case of short levy or erroneous refund, a notice within the time limit prescribed under Section 11-A is required to be issued. He contended that when the order of the Asstt. Collector finalising the provisional assessment and confirming the demand to the extent of Rs. 5.90 crores, was made on 15-10-1984, the applicants have paid this amount in instalments and finally cleared on 31-3-1985. Hence, if there had been any short payment, a notice should have been issued within a period of six months from 31-3-1985. Even taking the certificate of payment issued by the department, which is dated 11-7-1985 as the relevant date, the notice should have been issued within six months from that date. He also contended that even after the issue of order-in-appeal passed by the Collector disallowing certain deductions originally allowed by the Asstt. Collector. No demand has been issued by the department, till they filed the appeal before the Tribunal on 10-6-1988 and that was the reason they did not file the stay application. The demands came to be served on them only on 5-10-1988 and only thereafter, they filed the stay application. He, therefore, argued that even if the order of the Collector (Appeals) is taken as the relevant date, no demand has been issued within a period of six months from the date of the order of the Collector (Appeals) being 28-3-1988. Shri Seervai finally submitted that this is not a case where the applicants have dodged the payment. They have complied with the demand made by the department to the extent of Rs. 5.9 crores, when the assessment was finalised. They have also complied with another demand amounting to Rs. 1.40 crores arising out of the disallowance of certain deductions by the Collector (Appeals) since in that case the demand was within the time limit of Section 11A. In this case, the period covering from 1978-83 where provisional assessment was finalised on 15-10-1984 by an order and it is sought to be disturbed and short levy demanded, that could be done only by issue of the show cause notice within the time limit prescribed under Section 11A. He, therefore, contended that prima facie the demand is time barred requiring the grant of stay. He also made the following citations :

(3.) SHRI Seervai replied that in this case, the assessment has already been finalised by the Asstt. Collector, whereupon he confirmed the demand to the extent of Rs. 5.9 crores. He also stated that on payment of this demand, even the B-13 bond has been discharged. He thus refuted the contention of SHRI Mondal that the assessment is still provisional. SHRI Seervai also submitted that because the demand is prima facie time barred he is not pleading financial hardship.