il Appeal No 1101 of 1967
Appeal by certificate from the judgment and order dated September 28 1966 of the Calcutta High Court in Appeal No 7 of 1965
G L Sanghi B D Sharma and section P Nayar for the appellant
A K Sen B P Maheshwari and Shambhu Nath Chunder for the respondent
The Judgment of the Court was delivered by Beg J
The National Tobacco Co of India Limited herein after referred to as the Company the Respondent in the appeal before us manufactures Cigarettes at its Factory in Agrapara upon which Excise duty is vied by the appellant the Assistant Collector of Central Excise Calcutta Division hereinafter referred to as the Collector
The rates at which the Excise duty was imposed upon the cigarettes of the Company under the provisions of the Central Excise and Salt Act of 1944 hereinafter referred to as the Act were varied from time to time by the provisions of Finance Acts of 1951 and 1956 and the Additional Duties of Excise Goods of Special Importance Act of 1957
The Collector maintained an office at the factory itself for the levy and collection of tax
The Company was required to furnish quarterly consolidated price lists which used to be accepted for purposes of enabling the Company to clear its goods but according to the Collector these used to be verified afterwards by obtaining evidence of actual sales in the market before issuing final certificates that the duty had been fully paid up
The particulars of the cigarettes to be cleared were furnished by the Company on forms known as AR1 forms required by Rule 9 of the Central  Excise Rules
For facilitating collection of duty the Company maintained a large sum of money in a current account with the 825 Central Excise authorities who used to debit in this account the duty leviable on each stock of cigarettes allowed to be removed
This current account known as personal ledger account was maintained under the third proviso to Rule 9 which lays down 91        Provided also that the Collector may if he thinks fit instead of requiring payment of duty in respect of each separate consignment of goods removed from the place or premises specified in this behalf or from a store room or warehouse duly approved appointed or licensed by him keep with any person dealing in such goods an account current of the duties payable thereon and such account shall be settled at intervals not exceeding one month and the account holder shall periodically make deposit therein sufficient in the opinion of the Collector to cover the duty due on the goods intended to be removed from the place of production curing manufacture or storage
It appears that the company used to furnish its quarterly price lists to the Collector on forms containing nine columns including one to show the distributors  selling price
Until July 1957 so long as this form was used by the Company no difficulty seems to have been experienced in checking the prices
But after this column was dropped from the new form of six columns the excise authorities seem to have encountered some difficulty in valuing the cigarettes for vying excise duty
They  therefore changed the basis of assessment itself from the Distributors Selling Price to the wholesale cash selling price at which stockists or agents are selling the same to an independent buyer in the open market
They held the view that such a charge could be made having regard to the provisions of Section 4 of the Act
The Deputy Superintendent of Central Excise informed the Company of this change of basis on 5 11 1958 by a letter which also asked the Company to furnish its price lists immediately for determining the correct assessable value of its cigarettes
On 7th November 1958 the Deputy Superintendent served a notice upon the Company demanding payment of a sum of Rs 16707240 as basic Central Excise duty and Rs 7457485 as additional Central Excise duty on account of short levy for a certain brand of cigarettes cleared from the Company s factory from 10th August 1958 to 5th November 1958
On 12 11 1958 the Deputy Superintendent sent another notice demanding payment of a sum of Rs 61646749 as basic Central Excise duty and Rs 21049215 as additional central excise duty for short levy in respect of some brands of cigarettes cleared from the factory between 1 11 1957 to 9 8 1958
On 13 11 1959
the Deputy Superintendent sent a 826 third notice to the Company under Rule 10 A of the Central Excise Rules 1944 demanding payment of Rs 4072648 as basic Central Excise duty and Rs 1695850 as additional duty for short levy in respect of various brands
The Company applied to the Calcutta High Court under Article 226 of the Constitution against the three notices mentioned above one of which specifically under Rule 10 A and the other two under Rule 10 of the Central Excise Rules
A learned single Judge of that Court quashed the notices by his order of 15 2 1960 on the ground that the Company had not been given any opportunity of being heard so as to be able to meet the material collected behind its back which formed the basis of the demands under the aforesaid three notices
On a joint request of both ides
the High Court did not decide the question whether notices of demand were time barred
But the learned Judge said  Nothing in this order will prevent the respondent from proceeding to take any step that may be necessary for such assessment or for the realisation of the revenue in accordance with the law
The learned Judge had also held that neither the basis adopted by the company nor that put forward by the Collector was correct
The learned Judge pointed out the correct basis which was considered by him to be in consonance with the provisions of Section 4 subsa of the Act
He indicated the various factors required by Section 4 of the Act which had to be taken into account and held The determination as to whether a wholesale market exists at the site of the factory or the premises of manufacture or production etc
or which is the nearest wholesale market or the price at which the goods or goods of like kind and quality are capable of being sold must necessarily be a complicated question and must be determined carefully upon evidence and not arbitrarily
Such determination cannot wholly be made ex parte that is to say behind the back of the assessee
A satisfactory determination can only be made by giving all information to the assessee and after giving the assessee an opportunity of establishing his own point of view or checking andor challenging any material or evidence upon which the Excise Authorities wish to depend
 As no appeal was filed by either side against this decision it became final and binding between parties before us so that the question whether the High Court has correctly interpreted Section 4 of the Act in determining the basis on which the excise duty leviable could be assessed is not under consideration here
827 When the case went back to the Collector he issued a fresh notice on 24 4 1960
As the validity of this notice is the real question now in issue in the appeal before us it may be reproduced in toto here
It turns as follows Registered AD GOVERNMENT  OF INDIA Collectorate of Central Excise Office of the Assistant Collector of Central Excise Calcutta I Division 5 Clive Row Calcutta NOTICE C No VIb143583886 Dated 21st April
 1960 TO Ms National Tobacco Co India Ltd Agarpara 24 Parganas
In connection with the assessment of Central Excise duties for the periods  1 from 1st October 1957 to 5th November 1958 in respect of 316885000 of No Ten brand Cigarettes
from 1st January 1958 to 28th January  1958 in respect of 6600000 of DLT Mag Cigarettes
from 1st January 1958 to 5th February 1958 in respect of 9594000 of May Pole Cigarettes 
from 1st January 1958 to 7th February 1958 in respect of 3143500 Carltons Gold Seal Cigarettes
V from 1st January 1958 to 31st January 1958 in respect of 1471250 of John Peel Cigarettes
from 1st January 1958 to 16th January 1958 in respect of 8200000 of Light House Cigarettes
from 1st January 1958 to 16th January 1958 in respect of 9070000 of Gold Link Cigarettes
Please note that a sum of Rs 100513325 np
Rupees 10 lads five thousand one hundred thirty three and twenty five naya paise only as basic Central Excise duty and a total sum of Rs 34320825 np
Rupees three lacs forty three thousand two hundred eight and twenty five naya paise only as additional duty had been provisionally debited in your account on the basis of the price list supplied to us by you for the quarters 828 i beginning October 1957 dated 17th October 1957
ii beginning January 1958 dated nil
iii beginning April 1958 dated 14th April 1958 and iv beginning July 1958 dated 14 7 58 and v beginning October 1958 dated nil
We now propose to complete the assessments for the said periods from the evidence in our possession from which it appears  ithat there is no wholesale market for the goods covered by your price lists in or near the factory or the Place of manufacture and that the nearest wholesale market for the sale is the Calcutta market
ii the wholesale cash price of the articles in question at the time of sale andor removal of the goods at the Calcutta market at which goods of like kind or quality are sold or are capable of being sold have been ascertained by us and the evidence at our disposal reveals that the prices quoted by you in your price list are not correct
The prices at as per chart annexed hereto which has been prepared on the basis of available evidence in terms of section 4 a  of the Central Excise and Sale Act 1955
The vouchers mentioned in the chart are available for your inspection at any time next week during office hours
After obtaining inspection of the vouchers please attend at our office at 5 Clive Row Calcutta on 2nd May 1960 at 1030 a M for the purpose of discussing the points mentioned above 4
We are prepared to give you a personal hearing with regard to all the points indicated above
If you have any evidence in support of your contention you are at liberty to produce the same at the time of bearing
Thereafter please note that we propose to make the final assessment in accordance with law
Sd N D MUKhERJEE Assistant Collector of Central Excise Calcutta I Division Calcutta The Company challenged the validity of this notice by means of a second petition for Writs of Prohibition and Mandamus against the Collector on the ground that the notice was barred by time 829 and was issued without jurisdiction so that no proceedings founded on it could be taken
It was prayed that the Collector may be ordered to cancel the notice
The petition was allowed by a learned Single Judge of the Calcutta High Court on 3 1 1964 on the ground that such a notice was barred by the provisions of Rule 10 of the Central Excise Rules because the notice was held to be fully covered by Rule 10 and by no other rule
A Division Bench of the High Court confirmed this view on 8 9 1966 and dismissed the Collector s appeal
The case having been certified under Article 133a b and c for an appeal to this Court this question is before us now
The learned Single Judge as well as the Division Bench of the Calcutta High Court said that there was not enough material on record to conclude that there was any provisional assessment under Rule 10 B deleted on 1 8 1959 and substituted by Rule 9 B which laid down 10B PROVISIONAL ASSESSMENT OF DUTY 1 Notwithstanding anything contained in these rules a There the owner of any excisable goods makes and subscribed a declaration before the proper Officer to the effect that he is unable for want of full information to state precisely the real value or description of such goods in the proper Form  or b Where the owner of any goods has furnished full information in regard to the real value or description of the goods but the proper Officer requires further proof in respect thereof or c Where the proper Officer deems it expedient to subject any excisable goods to any chemical or other test The proper Officer may direct that the duty leviable on such goods may pending the pro duction of such information or proof or pending the completion of any such test be assessed provisionally
2 When the owner of any goods in respect of which the duty has been assessed provisionally under sub rule1 has paid such duty the proper Officer may make an order allowing the goods to be cleared for home consumption or for exportation as case may be and such order shall be sufficient authority for the removal of the goods by the owner Provided that before making any such order the proper officer shall require the owner to furnish a bond in the proper form binding the Owner to pay the differen 830 tial duty When the final assessment is made
3 When the duty leviable on such goods is assessed finally in accordance with the provisions of these rules the duty provisionally assessed shall be adjusted against the duty finally assessed and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed
the owner of the goods shall pay the deficiency or be entitled to a refund as the case may be No order directing provisional assessment contemplated by Rule 10 B applicable at the relevant time has been placed before us
Nor was the Company asked by the Collector to furnish a bond to pay up the difference after making a final assessment as was required under Rule 10 B
It was however contended for the Collector that the execution of a bond for the satisfaction of the Collector could be dispensed with in a case where the Company kept a large sum of money in deposit in the personal ledger account to guarantee its ability to meet its liabilities
It was also pointed out that the learned Single Judge as well as the Division Bench had found that the practice of provisionally approving the price lists supplied by the Company pending acceptance of their correctness after due verification had been established as a mater of fact
It was submitted that this was substantially a provisional assessment covered by Rule 10 B although it may not conform to the technical procedural requirements of such an assessment
Even if the making of debit entries could on the facts of the case be held to be merely provisional think that what took place could not be held to be a provisional assessment within the provisions of Rule 10 B which contemplated the making of an order directing such an assessment after applying_ the mind to the need for it
Before proceeding further we will deal with the question whether the Division Bench correctly refused to permit an argument that the impugned notice of 24 4 1960 fell under Rule 10 A
The ground given for this refusal was that such a case was neither taken before the learned Single Judge nor could be found in the grounds of appeal despite the fact that the appellant had ample opportunity of amending its Memorandum of appeal
The appellant has however relied on a previous intimation given to the counsel for the respondent that such a contention would be advanced at the hearing of the appeal and also on an application dated 21 3 1966 praying for permission to add the alternative ground that the impugned notice fell under Rule 10 A
We think that this refusal was erroneous for several reasons
Firstly the Company having come to Court for a Writ of Pro hibition on the ground that the impugned notice was issued with 831 out jurisdiction had necessarily to establish the case which it sets up in paragraph 25 of its Writ Petition that the notice was not authorised by the rules including Rule 10 A
As the notice of 21 4 1960 was followed on 4 5 1960 by a correction by another notice of certain statements both the notices were assailed in paragraph 25 ii in the following words The respondent has mala fide and without jurisdiction issued the said impugned notices pretending to falsely state that the aggregate sum therein mentioned has been provisionally debited in your petitioner s account and pretending to intimate to your petitioner that the respondent proposed to complete the assessment And thereby he is seeking under the guise of completing an alleged assessment which had already been completed and duty in respect whereof had already been paid to do indirectly what he could not do directly inasmuch as Rule 10A of the said Rules has no application to the facts of the case and inasmuch as recovery of any duty which might have been short levied under Rule 10 of the Rules is barred by limitation
This assertion was met by a categorical denial by the Collector in paragraph 26ii of the Collector s affidavit in reply where it was stated that it was denied that Rule 10 A of the said Rules had no application to the facts of the case as alleged or that the recovery of any duty which had been short levied was barred by limitation under Rule 10 of the said Rules as alleged or at all
Thus the applicability of Rule 10 A was very much in issue
Secondly We find from the Judgment of the learned Single Judge that as the burden lay upon the petitioning Company to demonstrate for obtaining a Writ of Prohibition that the impugned notice was not authorised by any rule its counsel had contended  inter alia that the notice did not fall under Rule 10 A
The question was thus considered by the learned Single Judge
Thirdly the question whether the Collector did or did not have the power to issue the impugned notice under or with the aid of Rule 10 A was a question of law and of jurisdiction
going to the root of the case which could be decided without taking further evidence
Indeed as the burden was upon the petitioning Company to show that the impugned notice was issued without jurisdiction a finding that the notice did not fall even within Rule 10 A was necessary before a Writ of Prohibition could issue at all
We think that the Division Bench ought to have permitted the question to be argued subject to giving due opportunity to the petitioning Company to meet it on such 832 terms as the Court thought fit even if the point was not taken in the grounds of appeal
Therefore we will consider this question also
Rule 10 of the Central Excise Rules ran as follows 10
Recovery of duties or charges short levied or erroneously refunded When duties or charges have been short levied through inadvertence error collusion or mis construction on the part of an officer or through misstatement as to the quantity description or value of such goods on the part of the owner or when any such duty or charge after having been levied has been owing to any such cause erroneously refunded the person chargeable with the duty or charge so short levied or to whom such refund has been erroneously made shall pay the deficiency or pay the amount paid to him in excess as the case may be on written demand by the proper officer being made within three months from the date on which the duty or charge was paid or adjusted in the owners account current if any or from the date of making the refund
Rule 10 A reads as follows 10 A Residuary powers for recovery of sums due to Government
Where these Rules do not make any specific provision for the collection of any duty or of any deficiency in duty if the duty has for any reason been short levied or of any other sum of any kind payable to the Central Government under the Act or these Rules such duty deficiency in duty or sum shall on a written demand made by the proper officer be paid to such person and at such time and place as the proper officer may specify
 The two rules set out above occur in Chapter III of the Central Excise Rules 1944 headed Levy and Refund of and Exemption from Duty
Rule 7 merely provides that the duty leviable on the goods will be paid at such time and place and to such person as may be required by the rules
Rule 8 deals with power to authorise exemptions in special cases
Rule 91 provides for the time and manner of payment of duty
This rule indicates that ordinarily the duty leviable must be paid before excisable goods are removed from the place where they are manufactured or stocked and only after obtaining the permission of the officer concerned
The third proviso 833 to Rule 9 has already been set out above
Rule 92 provides for the recovery of duty and imposition of penalty in cases where Rule 9 sub
r 1 is violated
Rule 9A specifies the date with reference to which the duty payable is to be determined
We are not concerned here with Rules 11 to 14 dealing with refunds rebates exports under bonds and certain penalties for breaches of Rules
Rule 52 and 52 A found in Chapter V dealing with a number of matters relating to Manufactured Goods may also be cited here  52
Clearance on payment of duty When the manufacturer desires to remove goods on payment of duty either from the place or a premise specified under rule 9 or from a store room or other place of storage approved by the Collector under rule 47 he shall make application in triplicate unless otherwise by rule or order required to the proper officer in the proper Form and shall deliver it to the Officer at least twelve hours or such other period as may be elsewhere prescribed or as the Collector may in any particular case require or allow before it is intended to remove the goods
The officer shall thereupon assess the amount of duty due on the goods and on production of evidence that this sum has been paid into the Treasury or paid to the account of the Collector in the Reserve Bank of India or the State Bank of India or has been despatched to the Treasury by money order shall allow the goods to be cleared
52A Goods to be delivered on a Gate pass 1 No excisable goods shall be delivered in a factory except under a gatepass in the proper form or in such other form as the Collector may in any particular case or class of cases prescribe signed by the owner of the factory and countersigned by the proper officer
 It will be noticed that in Chapter III the term assessment was used only in the former rule 10 B corresponding to the present rule 9 B while dealing with provisional assessment of duty
But Rule 52 shows that an assessment is obligatory before every removal of manufactured goods
The rules however neither specify the kind of notice which should precede assessment nor lay down the need to pass an assessment order
All we can say in that rules of natural justice have to be observed for as was held by this Court in K T M Nair vs State of Kerala1 the assessment of a tax on person or property is atleast of a quasi judicial character
1   94
L Sup
CI73 834 Section 4 of the Act lays down what would determine the value of excisable goods
But the Act itself does not specify a procedure for assessment presumably because this was meant to be provided for by the rules
Section 371 of the Act lays down that the Central Government may make rules to carry into effect the purposes of this Act
Section 37 sub
s 2 particularises without prejudice to the generality of the foregoing power that such rules may provide for the assessment and collection of duties of excise the authorities by whom functions under this Act are to be discharged  the issue of notice requiring payment the manner in which the duty shall be payable and the recovery of duty not paid
It is clear from Section 37 that  assessment and collection of duties of excise is part of the purposes of the Act and Section 4 dealing with the determination of value for the purposes of the duty also seems to us to imply the existence of a quasi judicial power to assess he duty payable in cases of dispute
Collection seems to be a term used for a stage subsequent to assessment
In a case where the basis of a proposed assessment is disputed or where contested questions of fact arise a quasi judicial procedure has to be adopted so as to correctly assess the tax payable
Rule 52 certainly makes an assessment obligatory before removal of goods unless the procedure for a provisional assessment under Rule 10 B now rule 9 B is adopted
But if no quasi judicial pro ceeding which could be described as an assessment either under Rule 52 or Provisional assessment under Rule 10 B now Rule 9 B takes place at the proper time and in accord ance with the rules is the Collector debarred completely afterwards from assessing or completing assessment of duty payable  That seems to us to be the real question to be decided here
One of the arguments on behalf of the Collector was that no assessment for the purpose of determining the value of excisable goods having taken place in the case before us there could be no levy in the eye of law
It was urged that even if there was no provisional assessment as contemplated by Rule 10 B whatever took place could at the most be characterised as an incomplete assessment which the Collector could proceed to complete even after the removal of the goals
It was contended that such a case would be outside the purview of Rule 10 as it was not determined whether there actually was a short levy
Hence it was submitted there was no question of a proceeding barred by the limitation prescribed for making a The demand for a short levy in certain specified circumstances
Division Bench while repelling this contention held  In the present case it appears that the procedure adopted was that the respondents issued a price list 835 quarterly
In that price list they gave their own estimate as to the value of the goods
For the time being the excise authorities accepted the value so given and gave a provisional certificate to that effect intending to check the market value and then finally determine the value later on
The procedure for issuing price list of approving the same provisionally and accepting payment therefore according to the estimate of the manufacturer is a procedure which is not to be found either in the Act or the Rules
It may be observed that this finding that the procedure of a provisional acceptance of the Company s estimates was adopted seems inconsistent with another finding that what took place was a final adjustment of accounts within the purview of the 3rd proviso to Rule 9 set out above constituting a levy accord to law
The Division Bench appears to have regarded this procedure of an almost mechanical levy as equivalent to a complete assessment followed by the payment of the tax which constituted a valid levy
Hence it concluded that there being a legally recognised levy the only procedure open to the Collector for questioning its correctness was one contemplated by Rule 10 so that a demand for a short levy had to be made within 3 months of the final settlement of accounts as provided specifically by Rule 10
The Division Bench considered this procedure to be an alternative to an assessment under Rule 52 at the proper time and also to a provisional assessment in accordance with the procedure laid down in Rule 10 B But to regard the procedure under Rule 10 as an alternative to an assessment would be to overlook that it presupposes an assessment which could be reopened on specified grounds only within the period given there
The term levy appears to us to be wider in its import than the term assessment
It may include both imposition of a tax as well as assessment
The term imposition is gene rally used for the levy of a tax or duty by legislative provision indicating the subject matter of the tax and the rates at which it has to be taxed
The term assessment on the other hand is generally used in this country for the actual procedure adopted in fixing the liability to pay a tax on account of particular goods or property or whatever may be the object of the tax in a particular case and determining its amount
The Division Bench appeared to equate levy with an assessment as well as with the collection of a tax when it
held that when the payment of tax is enforced there is a levy
We think that although the connotation of the term levy seems wider than that of assessment which it includes yet it does not seem to 836 us to extend to collection
Article 265 of the Constitution makes a distinction between levy and collection
We also find that in N B Sanjana Assistant Collector of Central Excise Bombay  Ors
vs The Elphinstone Spinning  Weaving Mills Co LtdA1 this Court made a distinction between levy and collection as used in the Act and the Rules before us
It said there with reference to Rule 1 0  We are not inclined to accept the contention of of Dr Syed Mohammad that the expression levy  in Rule 10 means actual collection of some amount
The charging provision Section 31 specifically says
There shall be levied and collected in such a manner as may be prescribed the duty of excise   It is to be noted that subsection i uses both the expressions levied and collected and that clearly shows that the expression levy  has not been used in the Act or the Rules as meaning actual collection
We are therefore unable to accept the view that merely because the account current kept under the third proviso erroneously mentioned as second proviso by the Division Bench to Rule 9 indicated that an accounting bad taken place there was necessarily a legally valid or complete levy
The making of debit entries was only a mode of collection of the tax
Even if payment or actual collection of tax could be spoken of as a de facto levy it was only provisional and not final
It could only be clothed or invested with validity after carrying out the obligation to make an assessment to justify it
Moreover it is the process of assessment that really determines whether the levy is short or complete
It is not a factual or presumed levy which could in a disputed case prove an assessment
This has to be done by proof of the actual steps taken which constitute assessment
Undoubtedly a mechanical adjustment and ostensible settle ment of accounts by making debit entries was gone through in the case before us
But we could not equate such an adjustment with an assessment a quasi judicial process which involves due application of mind to the facts as well as to the requirements of law unless we were bound by law to give an unusual interpretation to the term assessment
Here we do not find any such definition of assessment or any compelling reason to bold that what could at most be a mechanical provisional collection which would become a levy in the eve of law only after an assessment was itself a levy or an assessment
Rules 10 and 10A placed side by side do raise difficulties of interpretation
Rule 10 seems to be so widely worded as to 1  2045
837 cover any inadvertence error cullusion or misconstruction on the part of an officer as well as any misstatement as to the quantity description or value of such goods on the part of the owner as causes of short levy
Rule 10 A would appear to cover any deficiency in duty if the duty has for any reason been short levied except that it would be outside the purview of Rule 10A if its collection is expressly provided for by any Rule
Both the rules as they stood at the relevant time dealt with collection and not with assessment
They have to be harmonised In N B Sanjana s case Supra this Court harmonised them by indicating that Rule 10A which was residuary in character would be inapplicable if a case fell within a specified category of cases mentioned in Rule 10
It was pointed out in Sanjana s case Supra
that the reason for the addition of the new Rule 10A was a decision of the Nagpur High Court in Chhotabhai Jethabhai Patel vs Union of India1 so that a fresh demand may be made on a basis altered by law
The Excise authorities had then made a fresh demand under the provisions of Rule 10 A after the addition of that Rule the validity of which challenged but upheld by a Full
Bench of the High Court of Nagpur
This Court in Chhotabhai Jethabhai Patel  Co vs Union of India  2  also rejected the assessee s claim that Rule 10 A was inapplicable after pointing out that the new rule had been specifically designed for the enforcement of the demand like the one arising in the circumstances of the case
We think that Rule 10 should be confined to cases where the demand is being made for a short levy caused wholly by one of the reasons given in that rule so that an assessment has to be reopened
The findings given by the Calcutta High Court do not show that in the case before us there was either a short levy or that one of the grounds for a short levy given in Rule 10 really and definitely existed
No doubt the Division Bench gave a reason for the way in which the claims became time barred in the following words It is quite possible that the Excise authorities in an attempt tohelp the appellants by facilitating the movements of goods inadvertently allowed the claims to be barred by limitation
That however is not a matter which can affect the question of limitation
The bar of limitation has been imposed by Statute
The morality of the case or the conduct of the parties is therefore irrelevant unless the law provides that the court on that ground can afford relief  1 AIR 1952 Nag
139 2 1962 Supp 2 SCR 1 838 This finding was presumably given to show that the impugned notice fell within the purview of Rule 10 because the demand was due to a short levy caused by inadvertence of the officer concerned
It will be noticed that the Division Bench did not go beyond finding a possibility of such inadvertence
This is not a finding that it was definitely du  to it
No finding which could clearly relate the case to any cause for short levy found in Rule 10 was given
Moreover we find that there was no case taken up by the Company in its petition before the High Court that any short levy resulted from an inadvertence
of the officer concerned in the process of assessment
The case set up was that of a levy after a completed assessment in accordance with law which could not according to the Company be reopened
If therefore as we find from the conclusions recorded by the High Court itself what took place was not an asseessment at all in the eye of law which could not be reopened outside the provisions of Rule 10 we think that the case will fall beyond Rule 10 as it stood at the relevant time
The notice set out above does not purpoe to be issued under any particular rule probably because the Collector
in the circumstances of the case was not certain about the rule under which the notice could fall
But as was pointed out by this Court in Sanjana s case Supra the failure to specify the provision under which a notice is sent would not invalidate it if the power to issue such a notice was there
The notice alleges that it is a case of incomplete assess ment
The allegations contained in it have been characterised by the learned counsel for the Company as a change of front intended to cover up the neglet of the Collector in failing to comply with the correct procedure of making either an assessment before delievery contemplated by Rule 52 or a provisional assessment under Rule 10 B We are unable to hold either upon the findings given by the High Court or upon facts transpiring from the affidavits filed by the parties that the notice was a mere cloak for some omission or error or inadvertence of the Collector in making a levy or an assessment
We may point out that Rule 10 itself has been amended and made more reasonable in 1969 so as to require a quasi judicial procedure by serving a show cause notice within 3 months from the date on which the duty or charge was paid or adjusted in the owner s account current if any
This amendment made on 11 10 1969 indicates that the quasi judicial procedure
for a finding on an alleged inadvertence error collusion or misconstruction by an officer or misstatement by the assessee as the cause of an alleged short levy resulting from an assessment can now be embarked upon and not necessarily completed 839 within the prescribed period
We are however concerned with the procedure before this amendment took place
At that time it was certainly not clear whether a case would fall under Rule 10 even before the short levy or its cause was established
Furthermore in the present case the reason for an alleged short levy could be a change of basis of proposed assessment under instructions from higher authorities mentioned above
Even that change of basis was held by the High Court to be erroneous
Until the High Court indicated the correct basis there was an uncertainty about it
Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10 A itself _ which as pointed out in N B Sanjana s case Supra was a change in the law
One could go back still further and come to the conclusion that the real reason or the alleged short levy was a failure of the Company to supply the fuller information it used to supply previously and not just a misstatement
If the case does not clearly come within the classes specified in Rule 10 this rule should not be invoked because as was rightly contended for the appellant a too wide construction put on Rule 10 would make Rule 10A useless
The two rules have to be read together
It is true that Rule 10 A seems to deal only with collection and not with the ascertainment of any deficiency in duty or its cause by a quasi judicial procedure
If however it is read in conjunction with Section 4 of the Act we think that a quasi judicial proceeding in the circumstances of such a case could take place under an implied power
It is well established rule of construction that a power to do something essential for the proper and effectual performance of the work which the statute has in contemplation may be implied See Craies on Statute Law Fifth Edition P 105 The question whether there was or was not an implied power to hold an enquiry in the circumstances of the case before us in view of the Provisions of Section 4 of the Act read with Rule 10 A of the Central Excise Rule was not examined by the Calcutta High Court because it erroneously shut out consideration of the meaning and applicability of Rule 10A
The High Court s view was based on an application of the rule of construction that where a mode of performing a duty is laid down by law it must be performed in that mode or not at all
This rule flows from the maxim  Expressio unius act exclusio alterius
 But as we pointed out by Wills J in Colquohoun vs Brooks1 this maxim is often a valuable servant but a dangerous master  
The rule is subservient to the basic principle that Courts must endeavour to ascertain the legislative intent and 1 1888 2 62 840 purpose and then adopt a rule of construction which effectuates rather than one that may defeat these
Moreover the rule of prohibition by necessary implication could be applied only where a specified procedure is laid down for the performance of
a duty
Although Rule 52 makes an assessment obligatory before goods are removed by a manufacturer yet neither that rule nor any other rule as already indicated above has specified the detailed procedure for an assessment
There is no express pro hibition anywhere against an assessment at any other time in the circumstances of a case like the one before us where no  assessment as it is understood in law took place at all
On the other hand Rule 10A indicates that there are residuary powers of making a demand in special circumstances not foreseen by the framers of the Act or the rules
If the assessee disputes the correctness of the demand an assessment becomes necessary to protect the interests of the assessee
A case like the one before us falls more properly within the residuary class of unforeseen cases
We think that from the provisions of Section 4 of the Act read with Rule 10A an implied power to carry out or complete an assessment not specifically provided for by the rules can be inferred
No writs of prohibition or mandamus ere therefore called for in the circumstances of the case
Consequently we allow this appeal and set aside the orders of the Calcutta High Court
The Collector may now proceed to complete the assessment
In the circumstances of the case the parties will bear their own costs throughout


Summary:
The respondent manufactures cigarettes at its factory upon which Excise Duty is levied by the Assistant Collector of Central Excise Calcutta Division
The rates varied according to the provisions of Finance Act 1951 and 1956 and the Additional Duty of Excise Goods of Special Importance Act 1957
The Company was required to furnish quarterly consolidated price lists and the particulars of cigarettes to be cleared were furnished by the Company as required by Rule 9 of the Central Excise Rules
For facilitating collection of duty the Company maintained a large sum of money in a Current Account with the Central Excise authorities who used to debit this account for the duty leviable on each stock of cigarettes allowed to be removed
The Company used to furnish its quarterly price lists to the Collector on forms containing nine columns and until July 1957 so long as this form was used by the Company no difficulty was experienced in checking prices
But after this column was dropped from the new form of six columns the Excise authorities encountered some difficulty in valuing the cigarettes for levying Excise Duty
They therefore changed the basis of assessment from the Distributors selling price to the wholesale cash selling price at which stockists or agents were selling the same in the open market
The authorities informed the Company of this change of basis on 5 11 58 by letter which also asked the Company to furnish its price lists immediately for determining the correct assessable value of its cigarettes
Two days thereafter the authorities served a notice upon the Company demanding payment of Rs 16707240 P as Basic Central Excise Duty and Rs 7457485 P as Additional Central Excise Duty on ground of short levy for a certain brand of cigarettes cleared from Company s Factory between 10th August 1958 After another five days the authorities sent another notice demanding more than Rs 6 lakhs as Basic Central Excise Duty and more than Rs 2 lakhs as Additional Central Excise Duty
On the following day the authorities sent a third notice under Rule 10 A of the Central Excise Rules demanding more than Rs 40000as Central Excise Duty and more than Rs 16000 as Additional Duty
The Company challenged these notices by a writ before the High Court
 The High Court quashed the notices on the ground that the Company had not been given an opportunity of being heard
No appeal was filed by the other side against this decision but when the case went back to the Collector he issued P fresh notice on 24 4 1960
By this notice for certain periods a sum of more than Rs 10 lakhs was levied as Basic Central Excise Duty and a total sum of more than Rs 3 lakhs as Additional Duty and this amount had been provisionally debited in the Company s Account on the basis of the price list supplied by the Company and the Company was informed that if it desired a personal hearing it 823 can appear before the authorities to make the final assessment in accordance with law
The Company challenged the validity of this notice dated 24 4 60 on the ground that the notice was barred by limitation and was issued without jurisdiction so that no proceedings could be taken
The learned single Judge as well as the Divisional Bench of the High Court allowed the petition on the ground that the notice was barred by time under Rule 10 of the Central Excise Rules because the notice was held to be fully covered by Rule 10 and by no other rule
The case was certified under article 33a b and d for an appeal to this Court
Rule 10 of the Central Excise Rules provides that when duties or charges have been short levied through inadvertence or misconstruction etc the person chargeable with the duty so short levied shall pay the deficiency or pay the amount paid to him in excess on written demand by the proper officer within three months from the date on which the duty or charge is paid or adjusted in the owner s account if any or from the date of making the refund
It was contended that this was substantially a provisional assessment covered by Rule 10 B
The Division Bench of the High Court however refused to agree that the impugned notice of 24 460 fell under Rule 10 A
The reason given for this refusal was that such a case was neither taken before the learned single Judge nor could be found in the grounds of the appeal despite the fact that the appellant had ample opportunity of amending its Memorandum of Appeal
Allowing the appeal
HELD  i That the High Court erroneously refused to consider whether the impugned notice fell under Rule 10 A
The applicability of Rule 10 A was very much in issue because the Collector in his affidavit denied that Rule 10 A of the said rules had any application to the facts of the case
ii It cannot be accepted that merely because the current account kept under Rule 9 indicated that an accounting had taken place there was necessarily a legally valid or complete levy
The making of debit entries was only on ground of collection of the tax
Even if payment or actual collection of tax could be spoken of as a defective levy it was only provisional and not fINal
It could only be closed or invested with validity after carrying out the obligation to make an assessment that really determines whether the levy is short or complete
It is not a faCtual or presumed levy which could prove an assessment
This has to be done by proof of the actual steps taken which constitute assessment
836D A mechanical adjustment or settlement of accounts by making debit entries was gone through in the present case but it cannot be said that any such adjustment is assessment which is a quasi judicial process and involves due application of mind to the facts as well as to the requirements of law
Rule 10 and 10 A seems to be so widely worded as to cover any inadvertence error etc whereas Rule 10 A would appear to cover any deficiency in duty if the duty has for any reason been short levied except that it would be outside the purview of Rule 10 A if its collection is expressly provided or by any rule
Both the rules as they stood at the relevant time deal with collection and not with assessment
In N B Sanjana s case  this Court indicated that Rule 10 A which was residual
in character would be inapplicable if a case fell within a specified category of cases mentioned in Rule 10
It was pointed out in Sanjana s case that the reason for the addition 824 of the new rule 10 A was a decision of the Nagpur Chotabhai Jethabhai s case AIR 1952 Nagpur 139 so that a fresh demand may be made on a basis altered by law
The excise authorities had made a fresh demand under Rule 10 A the validity of which was challenged but it was upheld by a Full Bench decision of the High Court of Nagpur
This Court in Chotabhai Jethabhai s case also rejected the assessee s claim that Rule 10 A was inapplicable after pointing out that the new rule was specifically designed for the enforcement of the demand like the present one
836F 837E iiiThe present case therefore falls within the residuary clause of unforeseen cases from the provisions of section 4 of the Act read with Rule 10 A an implied power to carry out or complete an assessment not specifically provided for by the rules can be inferred
Therefore it is wrong to hold that the case falls under Rule 10 and not under Rule 10 A