COLLECTOR OF CENTRAL EXCISE, CHANDIGARH versus M/S SMITHKLINE BEECHAM CONSUMER HEALTH CARE LTD. AND ORS.

Citation: [2002] SUPP. 5 S.C.R. 633 · Decided: 20-12-2002 · Supreme Court of India · Bench: S.S.M. QUADRI · Disposal: Disposed off

Judgment (excerpt)

COLLECTOR OF CENTRAL EXCISE, CHANDIGARH 
A 
v. 
MIS• SMITH KLINE BEECHAM CONSUMER HEAL TH CARE 
LTD. AND ORS. 
DECEMBER 20, 2002 
. [SYED SHAH MOHAMMED QUADRI AND 
ARIJIT PASAYAT, JJ.) 
B 
Central Excise Act, 1944-Section J IA.and 38A-Notification No.1021 C 
79-Appendix, Para 3-Excise duty-Set off availed by assessee. in respect of 
duty already paid by sellers-Refund of duty to sellers pursuant to High 
Court ~s Order-Notice to· assessee for recovery of amount involved in set 
off-Applicability of Section J J A-Held, not applicable as there was no short 
levy and since scheme of the Notification operate in different field-However, 
case remanded back to Tribunal/or consideration of other questions raised D 
Words and Phrases: 
"Levy" and "'Assessment ".,-Meaning of In the context of Central Excise 
Act, 1944 .. 
Respondent-assessee was availing set off under Notification No. 201/ E 
79 in respect of inputs under Tariff item 68, on which duty was already 
paid by sellers. Sellers had paid duty on the inputs and the assessee had 
taken credit of it. Pursuant to sellers' writ petition, High Court had held 
that duty was not leviable on the inputs. Hence the duty paid was refunded 
to sellers. Appellant issued show cause notice to the assessee for recovery F 
of amount of duty involved in the set off under para 3 of Appendix to the 
Notification. Assessee challenged the notice the same being issued beyond 
period of limitation u/s I IA of Central Ell:eise Act, 1944. Assistant 
Collector, as well as Collector (Appeals) confirmed the demand. On appeal 
Appellate Tribunal set aside the orders holding that action .initiated was G 
beyond period of limitation u/s 11 A. 
In appeal to this Court appellant contended that the present case 
was not .covered by Section 11 A as the same relates to non-levy or short~ 
levy which is d.istinct from Para 3 of Appendill: to the Notification which 
633 
H 
634 
SUPREME COURT REPORTS (2002] SUPP. 5 S.C.R. 
A is in respect of variation of duty paid .on inputs; and that even if the 
notification got rescinded on 1.3.1988 Section 38A of the Act held the field. 
Respondent contended that Section I IA of the Act is applicable as 
it was the case of short-levy in as much as what was paid by the assessee 
was less than the payable amount because of set off; that since the 
B Notification itself had been rescinded w.e.f. 1.3.1986, no action was liable 
to be taken under Para 3 of Appendix to the Notification; and that the 
authority could not take assistance of Section 38A. 
Disposing of the appeals, the Court 
C 
HELD: I. Section llA of Central Excise Act, 1944 deals with 
recovery of duty not levied or not paid or short-levied or short-paid or 
erroneously refunded. The scheme under the Notification No.201179 
operated in a. different field altogether. There was no short-levy or non-
levy. The levy was made as per the applicable statutes. Only a benefit was 
D granted to the manufacturer in respect of the duty already paid on the 
inputs which constitute raw materials or component parts in the excisable 
goods. The benefit was gran'ted by exercise of powers conferred by sub-
rule (I) of Rule 8 of the Rules providing exemption of all excisable goods 
on which duty of excise is leviable and in the manufacture of which some 
ot~~r goods have been used as inputs. If the inputs have suffered duty, 
E the quantum thereof was allowed to be set--0ff. There is no variation of 
the duty leviable. That is invariable. What is determined is the quantum 
of duty payable after adjustment of the duty paid on the inputs. 
f639-A; H; 640-A, B, Cl 
1.2. Section 11 A, provides for recovery of duties not levied or not 
F paid or short-levied with quantification and collection. The method of 
collection does not affect the essence of duty, but only relates to the 
machinery of collection for administrative convenience. The term "levy" 
is wider in its import than the term "assessment". It may include both 
"imposition" as well as "assessment". Imposition is generally used for levy · 
G of a duty or tax by legislative provisions indicating the subject matter of 
levy and rate of levy. Levy of duty does not mean actual collection, there 
is a conceptual difference. Both the expressions "levy" am~ "collected" are 
u~ed. Therefore, lesser collection of duty because the adjustment of duty 
paid on inputs is not a case of short levr. Section 11 A has no application 
to such a situation. To that extent the Tribunal was not

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