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The order passed to finalize the assessment based on the RT­12 returns itself be treated as Show Cau

M/S. The Bombay Dyeing & Mfg. Co. Ltd   v.   The Commissioner of Central Excise CIVIL APPEAL NO. 5297 OF 2008 -December 9, 2019.

The appellant being a manufacturer of cotton and man-made fabrics contended that those goods were not amenable to excise duty since it was for captive consumption and not to be removed for the purpose of sale or for consumption as laid down under Rule 9 read with Rule 49 of the Central Excise Rule, 1944. The appellant filed two writ petitions under Article 226 of the Constitution before the Delhi HC. Also the appellant filed Civil Miscellaneous Petition praying interim relief. The HC while granting notice to the miscellaneous petition granted interim relief. As a result of the disposal of the writ petitions, the Assistant Collector of Central Excise informed the appellant that S.11A of the Central Excise Act was not applicable to the facts of this case. The appellant in response asserted a show cause notice u/s 11A of the Act. The Assistant Collector of Excise observed that the appellant had classified list of products and he was directed to pay excise duty. The Assistant Collector also directed the appellant to pay an amount of Rs. 35,92,234.67/- During this hearing the appellant reiterated its stand that show cause notice u/s 11A of the Act. The Assistant Collector of Excise however confirmed the demand of the excise duty. Then the appellant carried the matter to the Commissioner of Central Excise (Appeals) who rejected the appeal. The Commissioner also upheld the demand for excise duty and rejected the plea of the appellant regarding the necessity to issue Show Cause Notice u/s 11A of the Act. The appellant then took this matter to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). This appeal was also dismissed. Against this decision appeal was filed to the HC of Bombay u/s 35-G of the Act which was also dismissed. Now the dispute reached this court.

The chief issues before this court are Whether the demand for Central Excise is barred by limitation? Could the respondent authority have ignored the directions of the Delhi HC to hold no Show Cause Notice (SCN)?

The appellant argued that in the case of Rohit Mills Ltd. (supra) obliged the issue of SCN u/s 11A while disposing the writ petitions. This was claimed as a reason for the order of the HC of Delhi. Also the cases Bhopal Sugar Industries Ltd. vs. The Income Tax Officer, Bhopal; R.B.F.Rig Corporation, Mumbai vs. Commissioner of Customs(Imports), Mumbai; Metal Forgings & Anr. vs. Union of India & Ors.; J.K. Cotton Spinning and Weaving Mills Co. Ltd. vs. Collector of Central Excise; Commissioner of Central Excise, Calcutta vs. Hindustan National Glass & Industries Ltd.; Kalabharati Advertising vs. Hemant Vimalnath Narichania & Ors.; Jagmittar Sain Bhagat & Ors. vs. Director, Health Services, Haryana & Ors and Coastal Gases and Chemicals Pvt. Ltd. vs. Assistant Collector of Central Excise, Visakhapatnam & Ors. were referred supporting his argument.

The respondent supported the reasons of the authorities/Tribunal and contended that the question of issuing the SCN to the appellant u/s 11A does not arise. Also it was contended that the authorities acted as per the law and proceeded to pass the final assessment order after the disposal of the writ petitions by Delhi HC and opportunity of hearing was given to the appellant before passing such orders. Also it was contended that the order of Delhi HC did not create any impediment for the authorities to proceed against the appellant. The order suggests that if SCN is required to be issued and has not been so, authorities were free to issue a notice and take decision. Also the interim protection given to the appellant was conditional. A heavy reliance is placed in the case The Jam Shri Ranjitsinghji (supra).

After listening to the arguments of the parties to the case the court made the following observations. In M/s. J.K. Cotton Spinning and Weaving Mills Ltd. & Anr. vs. Union of India & Ors. the stand taken by the appellant in the writ has been negative by this court. Thus the question to liability to pay excise duty could not be disputed by the appellant. The Court observed that the order passed to finalize the assessment based on the RT­12 returns itself be treated as Show Cause Notice.

“Indisputably, the appellant voluntarily executed bonds in Form B­13 referable to Rule 9B of the Rules and also furnished bank guarantee for an amount equivalent to the differential amount of duty in respect of the fabric in question. The authorities have made endorsements on the bonds and on the monthly RT­12 returns filed by the assessee, indicating that it was a case of provisional assessment. Having submitted to that process, it is not open to the appellant to urge that an express order of provisional assessment has not been passed by the authorities.”

The court, after making the above observations, decided that the Bombay HC has rightly observed that the said decision have no application to case of provisional assessment followed by final assessment.

“In our opinion, the basis of this submission is ill-founded. The authorities have not been nor could be prohibited by the High Court of Delhi from proceeding with the matter in accordance with law. In the present case, all that the authorities have done is to follow the procedure consequent to provisional assessment, by passing a final order and raising demand on the basis of that order. The appellant, as a matter of fact, in terms of the conditional interim order is obliged to discharge its obligation in terms of the bonds executed in Form B­13 and the monthly RT­12 returns filed from time to time for the relevant period.”

Thus the appellant cannot be allowed to approbate and reprobate. The order of the Delhi HC cannot be given undue advantage to favour the appellant. Thus this honorable court dismissed this appeal.




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