EWAC ALLOYS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THE short point which arises for determination in the present case is whether Respondent No. 2 was entitled to commence proceedings under the provisions of Section 11a (1) of the Central excise Act against the petitioners on the ground of wilful suppression or wilful mis-statement as alleged.

(2.) THE facts giving rise to this Writ Petition, briefly, are as follows:

(3.) AT the relevant time, petitioners were the subsidiary of Larsen and Toubro. At that time Larsen and Toubro were the sole selling agents in respect of goods manufactured by the petitioner-Company. On 1st October, 1975 pursuant to the amendment of Section 4 of the central Excise Act, show-cause notice was given on December 20, 1977 by the Assistant collector of Customs. By the said show-cause notice, the petitioners were asked to explain whether secondary packing prices was included in the assessable value of the goods sold through larsen and Toubro. By an Order dated 2nd June 1981, the Assistant Collector of Customs accepted the contention advanced on behalf of the petitioners herein that wooden boxes, which was a secondary packing, was used for the purposes of despatching of the goods to up-country customers and by the said Order dated 2nd June 1981, the Assistant Collector of Customs came to the conclusion that packing charges in respect of the wooden boxes cannot be included in the assessable value. Against the Order of the Assistant Collector dated 20th December, 1977, the department did not prefer any appeal and the said Order became final. On 7th October, 1983, the judgment of the Supreme Court in the case of Bombay Tyres [1984 (14) E. L. T. 1896 (SC)] came to be delivered. Thereafter on 24th July, 1985, Respondent No. 2 herein gave a show-cause notice to the petitioners stating that the abovementioned secondary packing ought to have been included in the assessable value and since they were not included, by the above show-cause notice, the Collector purported to demand duty, amounting to Rs. 21,11,853/- for the period June 1980 upto June 1984. At this stage it may be mentioned that after the Judgment of the Supreme court in the case of Bombay Tyres petitioners have paid duty on the abovementioned packaging from July 1, 1984. By impugned Order dated January 20, 1987 the Collector came to the conclusion that the judgment of the Supreme Court referred to above, in Bombay Tyres case in 1983 indicated change in law right from the date when the new Section 4 came to be incorporated on 1st October, 1975 and in the circumstances, the Collector came to the conclusion that he was entitled to levy the abovementioned duty with penalty of Rs. 2,00,000/- under Rule 173q (1) for the period June 1980 upto June 1984. After the issuance of the impugned Order the department instituted Criminal proceedings. In the above circumstances, the Writ Petition No. 603 of 1987 has been filed by the petitioner-Company against the Order passed by the Collector under provisions of Section 11a (1) dated January 20, 1987. Petitioners have also filed Criminal writ Petition No. 1169 of 1988 under Article 227 of the Constitution read with Section 482 of the Criminal Procedure Code to quash the proceedings vide Case No. 646 of 1987 in the Court of the Chief Metropolitan Magistrate, Bombay instituted by the Assistant Collector of Central excise.