COLLECTOR OF CENTRAL EXCISE BARODA Vs. COTSPUN LIMITED

JUDGEMENT

(1.) This appeal has been referred to a Constitution Bench for the reason that there are two conflicting three Judge Bench decisions of this Court on the point at issue.

(2.) Briefly stated, the facts are:The assessee-respondent manufactures NES yarn. It had filed classification lists with the Excise authorities, the appellants, which had been approved under the provisions of Rule 173B of the Central Excise Rules, 1944. The approval classified the NES yarn under old Tariff Item 19-I(2)(a)(2)(e). On 28th September, 1977, a notice was issued by the Excise authorities to the assessee to re-open the assessment for the period February, 1977 to May, 1977. The reason for so doing was that the NES yarn ought to have been correctly classified under old Tariff Item 19-I(2)(F). A demand for differential duty was made. A second show cause notice was issued by the Excise authorities to the assessee on 18th November, 1977 for the period 1st June, 1977 to 17th June, 1977. The assessment for this period was sought to be re-opened for the same reason. Again, a demand for differential duty was made. These show cause notices were amended by corrigenda dated 28th February, 1978 and 1st April, 1978. The assessee replied to the show cause notices on 24th May, 1978. It contended that the count of the NES yarn was determinable and it had been correctly classified. It also contended that the approved classification lists could not be re-opened and, therefore, the demands for differential duty could not be enforced. The Assistant Collector uphold the assessee's contention that the duty liability having been ascertained on the basis of an approved classification list, the question of short levy of duty did not arise. The Appellate Collector allowed the appeal of the Excise authorities, reclassified the NES yarn and confirmed the demands for differential duty. The assessee approached the Tribunal in appeal. The Tribunal held that the revised assessment could be made effective only prospectively from the date of the show cause notices and not with reference to earlier removals made under approved classification lists. Accordingly, the demands were quashed.

(3.) The Excise authorities are in appeal against the order of the Tribunal. The assessee had not appeared at the stage when the matter was before a two and then a three Judge Bench, Amicus Curiae were appointed, and we are beholden to them for assisting us.