Full Judgment Text
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CASE NO.:
Appeal (civil) 3148 of 1985
PETITIONER:
RAINBOW INDUSTRIES (P) LTD.
RESPONDENT:
COLLECTOR OF CENTRAL EXCISE, VADODARA
DATE OF JUDGMENT: 04/10/1994
BENCH:
R.M. SAHAI & M.K. MUKHERJEE
JUDGMENT:
JUDGMENT
1994 SUPPL. (4) SCR 135
The Judgment of the Court was delivered by
R.M. SAHAI, J. The short question of law that arises for consideration in
this appeal directed against the judgment and order of the Customs, Excise
& Gold (Control) Appellate Tribunal, New Delhi, is whether the
classification and the price list accepted by the Department and acted
upon, found subsequently to be erroneous, is to be applied prospectively Or
retrospectively.
The appellant, a manufacturer of dye-stuff, filed a price list in.-Part IV
proforma as applicable for sales to related persons. The price list showed
various includible and excludible expenses as well as assessable value as
claimed by the appellant. This was approved by the Department on 6th
December 1975 and the assessable value as declared was accepted. The
approval was to be effective from 1st October 1975. After nearly a year the
Assistant Collector issued a show cause notice requiring the appellant to
show cause as to why the net assessable value as per the method shown in
the annexure should not be revised and differential duty recovered from the
appellant. The reply of the appellant was not accepted either by the
Assistant Collector Or by the appellate Collector or the Tribunal. In fact
before the Tribunal it was conceded on behalf of the appellant that the
method for determining the assessable value in the price list submitted by
the appellant was not correct.
The order of the Tribunal was challenged and it was urged that the
classification and the price list submitted by the appellant having been
accepted and acted upon under Rule 173(2) of the Central Excise Rules, 1944
the Department precluded the appellant from challenging it and, therefore,
it is estopped froth claiming that the appellant was guilty of suppression
of facts. The learned counsel urged that the classification and the price
list having been accepted and acted upon, the Department was not justified
in taking proceedings under Section 11A of the Central Excises & Salt Act,
1944. ft was also urged that the Department could not have changed its
opinion and the law does not contemplate issuing of any notice only
because the Department felt that a particular item was dutiable in another
entry. In the alternative the learned counsel submitted that where the
Department has been acting upon the price list submitted by the appellant
worked out in one manner but the Department claims that it should be
calculated in a different manner then even if the calculation resorted to
by the Department is held to be correct it should apply from the date of
issue of notice and not from the date when the price list was submitted.
Reliance for it was placed on the order passed by this Court in Civil
Appeal Nos. 1960-61 of 1988 in the case of Collector of Central Excises,
Calcutta Vs. Indian Oxygen Ltd., Khardah, Decided on 17th March, 1989-1990
(48) E.L.T. A 24.
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Since the appellant did not dispute that the method of calculation of the
duty by the department was correct, the submission of the learned counsel
on lack of jurisdiction to initiate proceedings is not necessary to be
decided as the power to issue show-cause notice vests even if the duty was
short- levied as a result of erroneous application of law. However, once
the Department accepted the price list, acted upon it and the goods were
cleared with the knowledge of the Department, then in absence of any
amendment in law or judicial pronouncement the reclassification should be
effective from the date the Department issued the show-cause notice. The
reason for it is clearance with the knowledge of the Department and no
intention to evade payment of duty.
In the result, this appeal succeeds and is allowed in part. The appellant
is held liable to pay duty on the dye-stuffs manufactured by ii in the
mariner calculated by the Department from 16th October, 1976, the date the
show-cause notice was issued to the appellant.
Parties shall bear their own costs.