Case: M/s. Serai Kella Glass Works (P) Ltd Vs. Collector of Central Excise, Patna

2. The appellants are manufacturers of sheet glass which at the material time was chargeable to Central excise duty on ad valorem basis. The appellants used to file their price lists in accordance with the procedure prescribed by the Central Excise Rules (hereinafter referred to as "the Rules") and pay duty according to their calculations. The trouble in this case arose with the price list No. 38 of 1979 which was filed on 4-7-1979. A show-cause notice dated 7-7-1979 was issued by the Assistant Collector of Central Excise calling upon the assessee to explain as to why certain deduction claimed by them should not be added back to the excisable value of the goods. This was followed up by another show-cause notice dated 16-8-1979 directing the appellants to follow the provisional assessment procedure prescribed under Rule 9-B of the Rules and execute bonds for the purpose of effecting further clearances. On 5-9-1979, the Superintendent of Central Excise issued yet another show-cause notice calling upon the appellants to explain as to why differential rate of duty should not be demanded under Rule 10 of the Rules w.e.f. 20-6-1979 and why penalty should not be imposed on them under Rule 173-Q of the Rules. By another order dated 21-3-1980, the Assistant Collector modified the price list filed by the appellants and disallowed all the deductions claimed by them except for tradeThe appellants filed a writ petition in the High Court challenging the aforesaid orders passed by the Superintendent of Central Excise. Ultimately on 15-9-1982, the High Court quashed the show-cause notice, the order passed on 21-3-1980 by the Assistant Collector of Central Excise disallowing the claim for the deductions made by the appellants and also the direction for provisional clearance on furnishing of bond given onThe High Court, however, remanded the case back to the Assistant Collector to ascertain the element which will constitute post-manufactural expenses which according to the High Court could not be included in the assessable value. The assessable value was directed to be redetermined by the Assistant Collector in accordance with the guidelines given by the HighThe Central Excise authorities did not prefer any appeal against the order of the High Court. On 7-3-1983, the Assistant Collector issued another show-cause notice as to why claims for various deductions should not be disallowed. By final order dated 6-9-1984, the Assistant Collector rejected the claims for deductions following the law laid down by this Court in the case of Union of India v. Bombay Tyres International Ltd. A sum of Rs. 4, 61, 09, 242.28p. was demanded for the period from 20-6-1983 to 30-7-1983. By a further order dated 17-10-1984, the Assistant Collector made another demand for differential duty amounting to Rs. 27, 81, 826.87p. for the period from 1-8-1983 toThe appellants contention is that these two orders were not preceded by any show-cause notice under Section 11-A of the Central Excises and Salt Act. This according to the appellants was mandatory and failure to give such a notice made these two orders void ab initio and of no legal effect. The appeal against the orders of the Assistant Collector was dismissed by the Collector (Appeals). A further appeal was preferred to Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal did not agree with the assessees contention that because no show-cause notice under Section 11-A was given to the appellants by the Excise authorities, the orders making demands by the Assistant Collector of Central Excise were void and had to be quashed

Court's reasoning:
14. Because the assessments had become final, this Court held that when the duty of excise had not been levied or paid or short-levied or short-paid, a notice had to be issued under Section 11-A to realise the amount which had been short-levied. The notice has to be issued normally within a period of six months of completion of final assessment. This case does not in any way give any support to the contention made by Mr.Section 11-A deals with recovery of duty not levied or not paid or short-levied or short-paid or erroneously refunded. Proceedings under Section 11-A have to be commenced with a show-cause notice issued within six months from the relevant date. "Relevant date" has been defined under sub-section (3)(ii) to mean in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessmentAfter final assessment, a copy of the order on the return filed by the assessee has to be sent to him. Duty has to be paid by the assessee on the basis of the final assessment within ten days time from the receipt of the return. No question of giving any notice under Section 11-A arises in such a case. It is only when even after final assessment and payment of duties, it is found that there has been a short-levy or non-levy of duty, the Excise Officer is empowered to take proceedings under Section 11-A within the period of limitation after issuing a show-cause notice. In such a case, limitation period will run from the date of the final assessment. The scope of Section 11-A and Rule 173-I are quite different. In this case, the provisional assessment earlier made by the proper officer has been quashed and pursuant to the direction of the High Court, the proper officer has made the final assessment. No question of failure of issuance of show-cause notice under Section 11-A arises in this case. Even otherwise, we do not find any infirmity in the order of the Tribunal