Delve into the significant legal battle between M/s. Bhilwara Processors Ltd. and the Department of Central Excise with the recent judgment pronounced by the Supreme Court of India. Explore the intricacies of the case and the consequential impact it may have on future legal proceedings. #SupremeCourt #CentralExcise
Facts
- M/s. Bhilwara Processors Ltd.’s Miscellaneous Writ Petition was dismissed by the Supreme Court on 29.11.88.
- They were obligated to pay disputed duty amounting to Rs.35,96,235/- from 25.5.1981 to 13.5.1985.
- The appellant’s appeal to the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) was unsuccessful.
- Department instructed the petitioners to enforce the Bank guarantee.
- The current appeal is against the High Court of Bombay’s judgment on 13.9.2007 in Central Excise Appeal No 237 of 2006.
- Appellant is in the business of manufacturing cotton and man-made fabrics.
- The High Court disposed of the writ petition based on the order passed by the Supreme Court in the mentioned case.
- The order by the Hon’ble High Court of Delhi was dated 10th March 1993.
- The disposal was in reference to the case discussed in the Hon’ble Supreme Court’s order.
Also Read: Agarwal v. Family Court: Resolving Document Production Dispute
Issue
- Two main questions for consideration: limitation of demand for Central Excise from 25.05.1981 to 14.05.1985, and whether assessment was provisional.
- Dependency of limitation issue on provisional assessment determination.
- Issue regarding ignoring binding directions of Delhi High Court’s order dated 12.03.1993, requiring Show Cause Notice under Section 11A of the Act.
Also Read: Supreme Court’s Landmark Judgment on Compensation for Loss of Dependency
Arguments
- The appellant argues that the execution of B-13 bonds or monthly RT-12 returns cannot be held against them as provisional assessment.
- Refers to the observation of the High Court of Delhi which required a formal notice to be issued to the appellant, the basis for disposing of the writ petitions.
- Cites the decision of the Division Bench of the High Court of Judicature at Bombay in The Jam Shri Ranjitsinghji case, upheld by the Supreme Court, as contrary to their stand.
- Argues that if the authorities had opted for provisional assessment, they were obligated to pass a specific order stating so.
- Relies on various court decisions and a circular from the Ministry of Finance to support the argument for the necessity of a formal order for provisional assessment.
- Mentions that the case of Rohit Mills Ltd. was considered in the High Court of Delhi’s order, making it inappropriate for the Department to challenge.
- The respondent argues that the facts of the relied upon case and the present case are almost similar, if not identical.
- According to the respondent, the appeal is devoid of merits and should be dismissed.
Also Read: Land Acquisition Challenges for Integrated Infrastructure Project
Analysis
- The appellant voluntarily executed bonds in Form B-13 as directed by the excise authorities for captive consumption on a provisional assessment basis.
- The appellant cannot claim there was no order/direction to clear the yarn on provisional assessment basis since B-13 Bond was consciously executed.
- The High Court of Delhi’s directions in the J.K. Cotton Spinning case were relied upon by the appellant in their writ petitions.
- Provisional assessments were made on the appellant’s fabric, as indicated by endorsements on the RT-12 returns and bonds executed in Form B-13.
- The contention that a specific provisional assessment order was required before clearance is deemed invalid due to the appellant’s voluntary compliance with the provisional assessment process.
- The authoritative orders and directions issued by the High Court were followed by the authorities post the disposal of the writ petitions.
- Section 11A of the Act applies to cases of recovery of duties not levied or paid, short-levied, or short-paid.
- The adamant position of the appellant regarding the necessity of a Show Cause Notice under Section 11A was addressed by the authorities in accordance with legal norms.
- The High Court’s order did not hinder the authorities from acting within their statutory obligations after the disposal of the writ petitions.
- The appellant’s plea that the Department cannot take a contrary stance post the High Court’s direction was found to be unfounded.
- The attempt to levy duty of excise after yarn is sized is illegal based on court decisions.
- Appellant must fulfill statutory obligations, including those under Rule 9B, due to the High Court’s exposition.
- In cases of provisional assessment, notice under Section 11A of the Act is not necessary as ruled by High Courts.
- Interim conditional stay granted by the High Court of Delhi required the appellant to furnish a Bank Guarantee.
- Writ petitions were filed by the appellant based on the decision in J.K. Cotton Spinning & Weaving Mills Co. Ltd. & Ors vs Union of India & Ors.
- The High Court of Delhi considered the decision in Rohit Mills Ltd. while disposing of the writ petitions.
- Central Excise Appeal was filed by the appellant in the High Court of Judicature at Bombay and eventually dismissed.
- Similar arguments were dealt with by the High Court of Judicature at Bombay in reference to encashment of Bank Guarantees.
- An interim order by the Supreme Court in a different case restrained the department from levying and recovering excise duty on certain conditions.
- Appellant cannot be allowed to take contradictory actions i.e., invite interim orders for provisional assessment and then deny submitting to the process.
- The appellant requested an interim order for executing bonds and filing monthly returns indicating provisional assessment, hence cannot now deny undergoing provisional assessment.
- The reliefs claimed in both petitions are the same, only differing in periods.
- The appellant filed Civil Miscellaneous Petition Nos. 1698/1981 and 1699/1981 seeking interim reliefs during the writ petitions.
- The reliefs claimed in Civil Miscellaneous Petition No 1699/1981 included a request for an order of stay permitting the appellant to further process and use various types of yarn in its composite mill.
- The appellant also requested to clear cotton fabrics without payment of duty on cotton yarn upon furnishing a bond and bank guarantee for an amount equivalent to 25% of the differential duty.
- Provisional assessment to duty under Rule 9B of the Rules was mentioned in relation to the case.
- The rule allows for provisional assessment of excisable goods in certain circumstances, pending the production of necessary documents or completion of tests, with the requirement of executing a bond for payment of the difference in duty if assessed finally.
- The time limits for determination of duty of excise, short-paid amounts, and erroneous refunds by the Central Excise Officer were outlined in the provided text.
- Different periods of time are specified based on the nature of the case, such as fraud, collusion, or unintentional errors.
- A provision stated that the Central Excise Officer may determine short payments of duty and proceed to recover them if not paid by the person in question.
- Explanations were provided regarding cases of fraud, collusion, or willful misstatement in relation to duty payment.
- The purport of the stated Rules has been conclusively answered by the Court in the case of M/s. J.K. Cotton Spinning and Weaving Mills Ltd. & Anr. vs Union of India & Ors.
- The conflicting opinions of different High Courts, including the High Court of Delhi, were resolved in this decision.
- The stand taken by the appellant in the writ petition was dismissed by the Court.
- The question of liability to pay excise duty was settled by this decision.
- The appellant could not dispute the liability to pay excise duty after the Court’s decision.
Decision
- The Assistant Collector of Excise issued an order-in-original on 19.8.1993 noting that the appellant had filed classified lists for its products which were provisionally approved.
- The appellant was directed to pay excise duty as per the order.
- The writ petition was disposed of in line with the orders of the Supreme Court.
- The High Court dismissed the writ petition on 10/12.3.1993 based on the directions of the Hon’ble Supreme Court.
- Future contentions were to be raised in reply to the show cause notice issued as per the Supreme Court’s directions.
- The appeal in light of the Supreme Court’s orders in M/s. Rohit Mills Ltd. was to be dismissed to avoid undue favor to the appellant.
- A modified interim relief was granted which specified terms for future payments and dispute resolution.
- Defendants 3 and 4 were restrained from taking any actions based on the prior directives and notices.
Case Title: M/S BOMBAY DYEING & MFG CO. LTD. Vs. COMMISSIONER OF CENTRAL EXCISE
Case Number: C.A. No.-005297-005297 / 2008
