LexCOMMISSIONER, CENTRAL EXCISE & CUSTOMS, MUMBAI AND ORS. versus M/S. I.T.C. LTD. AND ORS.
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COMMISSIONER, CENTRAL EXCISE & CUSTOMS, MUMBAI AND ORS. A
v.
MIS. I.T.C. LTD. AND ORS.
OCTOBER 31, 2006
[S.B. SINHA AND DAL VEER BHANDARI, JJ.]
Central Excise Act, 1944; Section I-A/Central Excise Rules; Rule
9(B): Valuation-Manufacture and packing of Cigarettes-Inclusion of cost
B
of Corrugated Fibre Containers in the manufacturing cost for the purpose C
of levy of excise duty-Issuance of show-cause-Notices demanding differential
amount of duty prior to completion of the assessment-Correctness of-Held:
A penal proceeding in terms of the provision of the Act could not be initiated
without completing the assessment proceeding-Thus, liability of the assessee
would arise only after completion of the assessment proceedings as
contemplated under the Rules-The differential amount of excise duty becomes D
payable only in the event the assessee could not deposit the amount so levied
after completion of the assessment-Hence, the Tribunal rightly held the
impugned show-cause-notices illegal-Interpretation of Statutes.
Words and Phrases:
'Relevant date '-Meaning of in the context of Central Excise Act.
The question which arose for consideration before this Court in these
appeals was as to whether completion of an assessment proceedings is a sine
qua non for issuance of notice under Section 11-A of the Central Excise Act,
1944.
Appellants contended that a provisional assessment being also an order
of assessment and keeping in view the purport and object for which Section
E
F
I 1-A of the Central Excise Act was enacted and read it with the definition of
"relevant date", the jurisdiction thereunder can be invoked even after a
provisional assessment is made and before a final assessment is completed. G
Dismissing the appeals, the Court
HELD: 1.1. Section 11-A of the Central Excise Act provides for a penal
provision, before a penalty can be levied, the procedures laid down therein
167
H
l68
SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.
A must be complied with. For construction ofa penal provision, it is trite, the
golden rule of literal interpretation should be applied. The difficulty which
may be faced by the Revenue is of no consequence. The power under Section
11-A of the Act can be invoked only when the duty has not been levied or paid
or has been short-levied or short-paid. Such a proceeding can be initiated within
six months from the relevant date, which, in terms of Sub-section (3)(ii)(b) of
B Section 11-A of the Act in a case where duty of excise is provisionally assessed
under the Act or the Rules made thereunder, is the date of adjustment of duty
after the final assessment thereof. A proceeding under Section 11-A of the
Act cannot, therefore, be initiated without completing the assessment
c
D
proceedings. (174-G-H; 175-A-B)
Ujjagar /'rints (II) v. Union of India, ( 1989) 3 SCC 488, referred to.
1.2. The question as to non-levy or short-levy of an excise duty would
arise only when the levy had been laid in accordance with law. When a duty is
levied, it becomes payable which in turn would mean legally recoverable.
{175-D)
New Delhi Municipal Committee v. Ka/u Ram, (1976) 3 SCC 407, relied
on.
2. t. In terms of the provisions of the Act and the Rules framed
E thereunder, the amount becomes payable only in the event, the assessee does
not deposit the amount levied within a period of ten days from the date of
completion of the order of assessment. A provisional assessment is made in
terms of Rule 9B inter alia at the instance of the assessee. Such a recourse
is resorted to only when the conditions laid down therein are satisfied, viz.,
where the assessee is found to be unable to produce any document or furnish
F any information necessary for assessment of duty on any excisable good.
(175-F-G)
2.2. Whereas provisional duty is levied in terms of Sub-Rule (1) of Rule
98, final assessment is contemplated under Sub-Rule (5) thereof by reason
G of which the duty provisionally assessed shall be adjusted against the duty
finally assessed and in the event, the duty provisionally assessed falls short
of or is in excess of the duty finally assessed, the assessee will pay the
deficiency or will be entitled to a refund, as the case may be. Ultimately, thus,
the liability of the assessee would depend upon the undertaking of exercises
by the assessing officer to complete· the assessment proceeding as
H contemplated under the Rules. (175-G-H; 176-AI
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