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Judgment
T.L. Viswanatha Iyer, J.—The challenge in this original petition is to the demand for excise duty under the Central Excises and Salt Act, 1944 (for short the Act) for matches cleared by the petitioner during the period June 19,1980 to March 31,1981. The demand has been made without giving the petitioner the benefit of the concessional rate of Rs. 1.60 per gross of fifty''s, as per Notification No. 99 of 1980 issued under Rule 8 of the Central Excise Rules. The circumstances leading to the filing of the Original Petition are as follows :-
The petitioner is a manufacturer of safety matches. The Government of India issued Notification No. 99 of 1980 on June 19, 1980 reducing the rate of duty payable for safety matches manufactured and cleared by small scale units. A copy of this notification is Ext. P1, The availability of the concession was subject to various conditions, as detailed in the various provisions in the notification. The petitioner satisfied these conditions and was therefore entitled to the benefit of the concessional rate of duty granted by the notifica tion. The petitioner was filing the return accordingly and they were given the benefit of the concession.
Subsequently and on February 23, 1982, Government of India issued another notification Ext. P3 by which the availability of the concession was considerably whittled down. It was stated that in order to become eligible for the concession the total produc tion of matches in a calender month should not exceed 15 million matches. The total clearance of matches for home consumption during the preceding financial year should not exceed 150 million matches. There were also other conditions. This notification was one issued on the subject, including Ext. P1. Though Ext. P3 was issued only on February 23,1982, Section 52 of the Finance Act 14 of 1982 gave it retrospective operation by declar ing that it shall be deemed to have and to have always had, effect on and from the 19th day of June, 1980. Such Section 2(d) of the section further provided that recovery shall be made of all such duties of excise which have not been collected, but which would have been collected, if the provisions of the section had been in force at all material times. In other words, the availability of concession in duty with effect from June 19,1980 was to be determined with reference to the notification, Ext. P3, and not with reference to the original notification No. 99 of 1980, namely, Ext. P1.
The reasons which led to the issue of these notifications have been traced by the Madras High Court in Bharat Match Works, Vanaramurthi and Others Vs. Union of India and Others, in which the validity of Section 52 of the Finance Act, 1982 was considered. The Division Bench, after tracing the genesis of the notifications, noted that Section 52 had been enacted for the purpose of obviating repayment of large amounts which had become refundable consequent on an earlier decision of the Madras High Court in which the validity of certain provisions in the notifications Ext. P1 had been successfully challenged.
Though the petitioner before me has also challenged the constitutional validity of Section 52 of the Finance Act he did not persist in it, and was rest content with accept ing the correctness of the decision of the Madras High Court in the case of Bharath Match Works.
After the enactment of Section 52 of the Finance Act, 1982, the Superintendent of Central Excise issued notice Ext. P4 dated October 19,1982, to the petitioner, intimat ing them that they were not entitled to the concessional rate of duty of Rs. 1.60 per gross of fifty''s as per the notification Ext. P1, during the period June 19,1980 to March 31,1981, inasmuch as their clearance during that period had exceeded 116.65 million matches. This was above the limits prescribed by the notification, Ext. P3, for eligibility for the conces sion. The petitioner was therefore called upon to show cause why an amount of Rs. 52,562.50, as mentioned in the work sheet, should not be collected from them under Sections 2(d) of Section 52 of the Finance Act, 1982.
The petitioner demurred to the notice, inter alia, on the ground that the demand was barred by time. The Assistant Collector of Central Excise, who adjudicated the mat ter, over-Ruled the petitioner''s contentions, by his order Ext. P6, and demanded the amount mentioned in due from them. The petitioner''s plea for bar of time was not accepted, for the reason that the demand had been raised as per Section 52 of the Finance Act, 1982 under which it was stated, there could not be any limitation of time. Section 52 specifically enjoins the department to review cases right from June 19,1980. The demand was there fore in order.
Though the petitioner took up this order Ext. P6 in appeal and second appeal, they were not successful. The appeal before the first appellate authority was rejected at the threshold for non-compliance with the first proviso to Section 35F since the petitioner did not furnish security for the amount of duty demanded, as directed by the Collector (Appeals). Copy of the Collector''s order is Ext. P7. The second appeal before the Appel late Tribunal stood dismissed by the order, Ext. P8, on the ground that the question of validity of Section 52 of the Finance Act, 1982, raised by the petitioner, could not be gone into by the Tribunal.
The petitioner challenges these orders of the three statutory authorities. The only contention now raised is that the initiation of the proceedings by the notice Ext. P4 was beyond the period of six months prescribed by Section 11A of the Central Excises and Salt Act, 1944 and therefore without the authority of law, null and void. It is pointed out that the case is one of short levy and therefore demand could be made for the short levied amount of duty only in accordance with, and subject to the limitations contained in Section 11A.
The respondents contest this submission with the plea that Section 52 of the Finance Act, 1982 enables them to review all cases of this nature and to make demand in all cases where the amount would have been payable if the section had been in force from June 19, 1980. The bar of time u/s 11A will not apply to such cases.
Before I proceed to discuss the rival contentions, I must mention that the respondents do not question or challenge the maintainability of this original petition.
Section 11A(1) of the Central Excises and Salt Act reads:
"When any duty of excise has not been levied or paid or has been short levied or short-paid or erroneously refunded, the Collector of Central Excise may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice":
Provided that where any duty of excise has not been levied or paid or has been short-levied or short paid or erroneously refunded by reason of fraud, col lusion or any wilful mis-statement or suppression of fact, or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty, bu such person or his agent, the provisions of this sub-section shall have affect, as if for the words "six months", the words "five years" were sub stituted."
The relevant clauses of Section 52 of the Finance Act, 1982 are as under:
"52. Provisions as to duties of excise on matches in relation to a certain period and validation -
(1) The notification of the Government of India in the Ministry of Finance (Depart ment of Revenue) No. C.S.R. 77(E) dated 23rd day of Feb. 1982, which was issued in exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 to provide for certain exemptions from duty in rela tion to matches shall, subject to the modifications specified in the Fourth Schedule - (a) be deemed to have, and to have always had, effect on and from the 19th day of June, 1980; and
(b) be deemed to prevail, and to have always prevailed, over all notifications issued on or after the 19th day of June, 1980 but before the 23rd day of Feb. 1982 under Sub-rule (1) of the said Rule 8 in relation to matches.
Explanation - For the purposes of this section, ''matches'' means matches falling under Item No. 38 of the First Schedule to the Central Excise Act.
(2) Any action or thing taken or done or purported to have been taken or done on or after the 19th day of June, 1980 and before the 23rd day of Feb. 1982 in relation to matches, under the Central Excises Act and the Central Excise Rules, 1944, read with notifications referred in clause (b) of Sub-section (1), shall be deemed to be, and to have always been, for all purposes, as validly and effectively taken or done as if the provisions of Sub-section (1) had been in force at all material times and such action or thing had been taken or done under the Central Excises Act and the Central Excise Rules, 1944, read with the notification dated the 23rd day of Feb. 1982, referred to in Sub-section (10) and, accordingly, notwithstanding anything contained in any Judgment, decree or order of any court, Tribunal or other authority, -
(a) xx xx xx(b) xx xx xx(c) xx xx xx (d) recovery shall be made of all such duties of excise which have not been collected or, as the case may be, which have been refunded but which would have been collected or as the case may be, would not have been refunded, if the provisions of this section had been in force at all material times.
Explanation - For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force."
In all cases in which excise duty has not been levied at all, or where it has been short-levied, the Collector of Central Excise may serve notice on the person char geable with the duty requiring him to show cause why he should not pay the amount specified in the notice. This notice is ordinarily to be served within six months from the relevant date, but the time is enlarged to five years if the non-levy or the short-levy was by reason of any fraud, collusion or wilful mis-statement or suppression of fact or the Rules, with intent to evade payment of duty. There is no case for the respondents that any of these circumstances justifying enlargement of the time exist in this case. The proceedings for levy and demand of the additional amount of duty payable by the petitioner should therefore have been initiated within six months, if Section 11A were to apply to this case.
This case is one of short-levy inasmuch as the petitioner was held entitled to the benefit of the concessional rate of Rs. 1.60 per gross of fifty''s as per the notification No. 99 of 1980. If the notification Ext. P3 were to apply from June 19,1980, u/s 52 of the Finance Act, 1982 the petitioner would have had to pay at the normal higher rate. The proceedings for levying and demanding additional amount due were initiated only as per Ext. P4 dated October 19,1982; long after the expiry of the period of six months from the relevant dates. The question is whether, despite this lapse of time, the respondents are entitled to levy or demand the short-levied amount of duty, by virtue of Section 52 of the Finance Act, 1982.
I am unable to accept the respondents'' contention that Section 52 of the Finance Act, 1982 overrides the provisions of Section 11A of the Act and does away with the period of time for levy and collection of the amounts which have become payable by the operation of that provision. Section 52 retrospectively denies the benefit of conces sional rates of duty for certain categories of small scale units, based on the quantum of their clearance. Sub-section 2(d) enables recovery of such amounts where the amounts had not been collected but which were otherwise payable under the amended provisions. But there is no non-obstante clause in Sub-section 2(d) and it has not been collected made operation notwithstanding anything contained in Section 11A. This provision in the Act continues to govern and apply to all cases of non levy or short levy and any proceedings for re-assessment for levying and demanding short levied duty has still to conform to it. Section 11A is not rendered ineffective so far as proceedings for lavy of duty u/s 52 are concerned. Section 52 has only modified on exemption/concession granted earlier by Notification No. 99 of 1980. The levy and collection have to be in accordance with the provisions of the Act (including Section 11A). In the absence of any specified provisions in that behalf, Section 52 cannot be enforced ignoring the existence of, or the limitations imposed by Section 11A. It has to be read and applied subject to Section 11A of the Act and therefore no proceedings can be commenced for levying or collecting the duty payable by virtue of Section 52 beyond the period of time limited by Section 11A.
An analogous question relating to Section 51 of the Finance Act, 1982 come up for consideration before the Supreme Court, in J.K. Cotton Spinning and Weaving Mills Ltd. and Anr Vs. Union of India (UOI) and Ors, . This was an appeal from the decision of the Delhi High Court in J.K. Cotton Spinning and. Weaving Mills Ltd. v. Union of India [ 1983 E.LT. 239]. The retrospective effect to the provisions in volved in that case related back to February 28,1944 when the Central Excise Rules came into force. This was challenged as oppressive and unreasonable and as violative of the rights guaranteed under Articles 14 and 19(1)(g) of the Constitution. The Supreme Court held in that context that Section 51 of the Finance Act, 1982 was subject to the provisions of Section 11A of the Act, and that was sufficient to allay the apprehension of the assessed. The contention of the revenue that Section 52 of the Finance Act overrides Section 11A was not accepted, the court observing :
"51. The apprehension of the appellants is that the amendments to Rules 9 and 49 having been made retrospective from the date the Rules were framed, that is , from Feb. 28, 1944, the appellants and others similarly situated may be called upon to pay enormous amounts of duty in respect of intermediate goods which have come into existence and again cosumed in the integrated process of manufac turing of another commodity. There can be no doubt that if one has to pay duty with retrospective effect from 1944, it would really cause great hardship but, in our opinion, in view of Section 11A of the Act, there is no cause for such apprehension.
u/s 11A(1) the excise authorities cannot recover duties not levied or not paid or short-levied or short paid or erroneously refunded beyond the period of six months, the proviso to Section 11A not being applicable in the present case. Thus although, Section 51, Finance Act, 1982 has given retrospective effect to the amendments of Rules 9 and 49, yet it must be subject to the provisions of Sec tion 11A of the Act. We are unable to accepte the contention of the learned Attor ney General that as Section 51 has made the amendments retrospective in operation since Feb. 28, 1944, it should be held that it over-rides the provision of Section 11A. If the intention of the Legislature was to nullify the effect of Section 11A, in that case, the Legislature would have specifically provided for the same. Section 51 does not contain any non-obstante Clause, nor does it refer to the provision of Section 11A. In the circumstances, it is difficult to hold that Section 51 overrides the provision of Section 11A."
The ratio of this decision must squarely apply to the facts of this case. The comparatively short period of retrospectivity by Section 52 cannot alter the legal position. It has to be held that Section 52 of the Finance Act, 1982 is subject to Section 11A of the Act.
It is not in dispute that the proceedings initiated by Ext. P4 are beyond the period of time prescribed u/s 11A. The petitioner has therefore to succeed in this original petition. The proceedings initiated as per Ext. P4 and culminating in Exts. P6, P7 and P8 are illegal and invalid. They have to be quashed. I do so.
The original petition is allowed.
There will be no order as to costs.