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PJ/CASE LAW/2016-17/3067

Whether the classification and the price list accepted by the Revenue and acted upon, found subsequently to be erroneous, is to be applied prospectively or retrospectively?

 
Case:- RAINBOW INDUSTRIES (P) LTD. Versus COLLECTOR OF CENTRAL EX., VADODARA
 
Citation:- 1994(74) E.L.T.3 (SC)
 
Brief Facts:- 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 stopped from claiming that the appellant was guilty of suppression of facts.
 
Appellant’s Contention:- The appellant 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. It 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 appellant submitted that where the Department has been acting upon the price list submitted by the us 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 Excise, Calcutta v. Indian Oxygen Ltd. Khardah, decided on 17th March, 1989 - 1990 (48) E.L.T. A24.
 
Respondent’s Contention:- The Respondent defended the impugned order by reiterating the findings of the Tribunal.
Reasoning of Judgment:- The Apex court heard the matter and finds that 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.
 
Decision:- Appeal succeeds and is allowed in part. The appellant is held liable to pay duty on the dye-stuffs manufactured by it in the manner 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.
 
Comments:- The Crux of this case is that the appellant has made clearances with the knowledge of the Department and no intention to evade payment of duty. The Apex court has decided that 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.
 
 
 
 

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