JAMSHRI RANJITSINGHJI Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) The above appeal arises out of the order of the Commissioner of Central Excise (Appeals), Pune, upholding the differential duty demand of Rs. 63,57,102.76 on finalisation of provisional assessment covering the period May, 1981 to May, 1984.

(2.) The brief facts of the case are that the appellants herein are engaged in the manufacture and sale of cotton yarn, cellulosic spun yarn, non -cellulosic spun yarn and manmade fabrics. They manufactured yarn liable to duty under tariff Item Nos. 18, 18A and 18E of the first Schedule to the erstwhile Central Excise Tariff. They had filed a Writ Petition No. 1063 of 1981 in the Hon'ble Delhi High Court challenging the levy of excise duty on yarn manufactured and and consumed captively, and the court by its order dated 08.05.1981 stayed the recovery of the disputed duty subject to the appellants furnishing a bond for the same and furnishing a bank guarantee for 50% of the disputed amount of duty. The appellants executed the bond in Form - B -13 along with requisite bank guarantees in respect of 50% of the duty payable on yarn captively consumed. The bond was accepted and assessments were made provisional under Rule 9B of the Central Excise Rules, 1944 pending the disposal of the writ petition before the High Court. By Notification 22/82 dated 20/02/1982 Rules 9 and 49 of the Central Excise Rules were amended with retrospective effect by the Finance Act requiring payment of duty even on captively consumed yarn. The Delhi High Court in the case of J.K. Cotton Spinning and Weaving Mills reported in 1983 ELT 239 (Del) held that yarn captively consumed is chargeable to duty and the writ petition field by the present appellant was also disposed of following the principles laid down in the J K Cotton Mills case. The Court, however, observed that the present appellants would be entitled to invoke the provisions of Section 11A of the Central Excise Act, 1944 when recoveries were sought to be made from them for the past period. The appellants filed Civil Appeal No. 219/1984 in the Supreme Court challenging the validity of Rules 9 and 49. The Court directed the assessees to pay 50% of the above disputed dues and in respect of balance 50%, the Court directed furnishing of bank guarantees and bonds or continuation in operation of the bonds and bank guarantees already furnished in pursuance of the Delhi High Court order dated 08.05.1981. No stay in respect of future recoveries were granted and the apex Court directed the appellants to pay the full duty on yarn cleared for captive consumption. The appellants paid 50% and kept alive the bank guarantees. The assessments were finalised by the jurisdictional Superintendent on 19.05.1995. The Supreme Court upheld the judgment of the Delhi High Court in J K Cotton Spinning and Weaving Mills thereby upholding the amendment of Rules 9 and 49 with retrospective effect. The supreme Court held that where notices under Section 11A had been issued to any assessee the same would be decided after extending an opportunity of personal hearing and 8 weeks time was given for filing reply to the notices if issued prior to the date of its judgments. The court also held that if notices have not been received, they could be issued within the time limit prescribed under Section 11A of the Central Excise Act, 1944. It was further observed that the question whether demands were issued under Section 11A or not will be decided by the Assistant Commissioner. The court further held that bank guarantees furnished by the assessees shall be made available for realisation of dues if any.

(3.) During the pendency of the appeal before the Hon'ble Supreme Court the Central Excise authorities called upon the assessees by letter dated 12/01/1995 to pay Central Excise duty arrears of Rs. 63,57,102.76 but as the assessee's petition was pending decision by the Supreme Court recovery of duty was not pursued till the decision of the Supreme Court. After the decision of the Supreme Court in the assessee's own case, the jurisdictional Superintendent vide his letter dated 11.04.1995 informed the appellants that provisional assessments made on RT12 returns for the period May, 1981 to May, 1984 were to be finalised. The appellants responded by letter dated 09.05.1995 contending that the question of assessments was not an issue and it was incorrect to levy and collect duty on yarn captively consumed and contending that they were entitled to refund of Rs.68,78,320.65 already paid by them under protest in accordance with the interim order of the Supreme Court, as the recovery was barred by limitation. They also filed civil suit before the Court of Civil Judge, Senior Division Solapur, seeking a declaration that the entire proceedings initiated by the Superintendent on 11.04.1995 was without jurisdiction, but the suit was dismissed both on maintainability and on merits, and the appeal against the dismissal was disposed of by the High Court, directing the appellants to prefer a statutory appeal under the Central Excise Act, 1944. The provisional assessment was finalised by the Range Superintendent, who directed the appellants to pay the balance duty of Rs.63,57,102.76 (out of the total dues of Rs. 1,37,56,641.30 payable as per RT -12 returns for May, 1981 to May, 1984 the assessees had already paid Rs.68,78,320.65 through PLA and an amount of Rs.5,21,217.89 was adjusted against a sanctioned refund). An appeal before the Commissioner (Appeals) was filed who held as under: