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Upper Ganges Sugar Mills Ltd Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1987)(12)LC161Tri(Delhi)
AppellantUpper Ganges Sugar Mills Ltd
RespondentCollector of Central Excise
Excerpt:
.....against the order-in-appeal no.314-c.e./80, dated 14-54980 by which the appellate collector of central excise, delhi rejected the appeal against the assistant collector's order no. 97-cc/77 dated 3-8-1977. the assistant collector, by his order, held that the upper ganges sugar mills had contravened sections 7 and 8 of the produce cess act, 1966 and imposed penalty of rs. 250/- on the assessee. the assistant collector also demanded the oil cess due on 36,254 quintals of oil at the appropriate rate.3. the bench invited both sides to present their arguments on the jurisdiction of this tribunal to hear the appeal. shri j. bannerjee, learned counsel for m/s. upper ganges sugar mills, chandausi submitted at some stage in the proceedings that the tribunal was not competent to hear an appeal.....
Judgment:
1. This appeal was originally filed as Revision Application before the Central Government and has been transferred to this Tribunal for disposal as if it were an appeal filed before the Tribunal.

2. The Revision Application was filed against the Order-in-Appeal No.314-C.E./80, dated 14-54980 by which the Appellate Collector of Central Excise, Delhi rejected the appeal against the Assistant Collector's Order No. 97-CC/77 dated 3-8-1977. The Assistant Collector, by his order, held that the Upper Ganges Sugar Mills had contravened Sections 7 and 8 of the Produce Cess Act, 1966 and imposed penalty of Rs. 250/- on the assessee. The Assistant Collector also demanded the oil cess due on 36,254 quintals of oil at the appropriate rate.

3. The Bench invited both sides to present their arguments on the jurisdiction of this Tribunal to hear the appeal. Shri J. Bannerjee, learned counsel for M/s. Upper Ganges Sugar Mills, Chandausi submitted at some stage in the proceedings that the Tribunal was not competent to hear an appeal against the order of the Appellate Collector of Central Excise under the Produce Cess Act. At a later stage of the hearing, he agreed with the sub-mission of Shri Sundar Rajan, the learned Departmental Representative, that the Tribunal was competent to hear the appeal. Shri Sundar Rajan relied on the decision reported in AIR 1983 Delhi 402 in support of his contention that the Produce Cess Act must be deemed to have been repealed by implication to the extent that the Tribunal was empowered to hear appeals against the orders passed by the Appellate Collector of Central Excise and to dispose of transferred Revision Applications as appeals.

4. We have carefully considered the submissions from both sides. The Produce Cess Act, 1966 (Act No. 15 of 1966) provides for the imposition of Cess on certain produce for the improvement and developments of the methods of cultivation and marketing of produce and for matters connected therewith. Section 3(2) provides for the levy and collection as a cess, on every produce, specified in Column 2 of the Second Schedule to the Act, a duty of excise at such rate not exceeding the rate specified in the corresponding entry in Column 3 thereof, as the Central Government may, by notification in the Official Gazette, specify. Section 9 provides for the assessment of the cess on the basis of returns filed by the assessee. Section 10(1) provides for appeals against assessments made under Section 9 to such appellate authority as the Central Government may, by notification in the Official Gazette, appoint in this behalf. Sub-section 4 of Section 10 provides that the Central Government may, on the application of any person aggrieved by any order made by the Appellate Aurthority under Sub-section 1 of Section 10 or Sub-section 3, cancel or modify such order, if such application is made within six months from the date of the order made under Sub-section 1 or Sub-section 3.

5. The provisions of Section 50 of the Finance (2) Act, 1980 read with the 5th Schedule to the Act made amendments in the Customs Act, 1962 to provide for the Appellate Tribunal and for matters connected therewith which came into force from 11th October, 1982. Similar amendments were made in the Central Excises and Salt Act, 1944 and in the Gold (Control) Act, 1968. Section 35B of the Central Excises and Salt Act defines the appeals which may be heard by the Appellate Tribunal in relation to Central Excise matters. Among other things, the Tribunal may hear an appeal against an order passed by the Collector (Appeals) under Section 35A and an appeal against an order passed by the Appellate Collector of Central Excise under Section 35, as it stood immediately before the appointed day. The question which we have to consider is whether the order which is challenged before us is an order passed by the Appellate Collector of Central Excise under Section 35 of the Central Excises and Salt Act as it stood immediately before the appointed day.

6. Section 35 of the Central Excises and Salt Act as in force prior to 11th October, 1982 provided, among other things, for appeals against decisions or orders passed by Central Excise Officers under the Act or the Rules made thereunder, to any Central Excise Officer empowered in that behalf by the Central Government. The Appellate Collector of Central Excise has been appointed as an Appellate Authority to hear and dispose of appeals against orders passed by officers of Central Excise lower in rank than a Collector of Central Excise. The decisions or orders against which such appeals lie should be ones passed under the Central Excises and Salt Act or the rules made thereunder. It is clear that an order-in-appeal passed by the Appellate Collector of Central Excise under Section 10(1) of the Produce Cess Act, 1966 is not an order passed by him under Section 35 of the Central Excises and Salt Act as it stood prior to the 11th October, 1982, 7. The Departmental Representative has laid much emphasis on Section 15(2) of the Produce Cess Act which reads as follows : - "The provisions of the Central Excises and Salt Act, 1944 (1 of 1944), and the rules made thereunder, including those relating to refunds and exemptions from duty, shall so far as may be, apply in relation to the levy and collection of duties of excise on any produce specified in the Second Schedule, as they apply in relation to the levy and collection of duty payable to the Central Government under that Act." He, therefore, contends that the amended provisions of the Central Excises and Salt Act whereby the Tribunal is empowered to hear appeals against orders passed by the Collector (Appeals) under Section 35A of the Central Excises and Salt Act or the Appellate Collector of Central Excise under Section 35 of the Act, as it stood prior to 11th October, 1982, constitute sufficient authority and confer jurisdiction on the Tribunal to hear appeals against orders under the Produce Cess Act, 1966. In this connection, he relies on the Delhi High Court decision in AIR, 1983-402 in the case of Banwari Lal Radhey Mohan v. The Punjab State Co-operative Supply and Marketing Federation Ltd., Chandigarh.

The High Court construed Section 39 of the Arbitration Act and Section 10 of the High Court Act and on the principles of harmonious construction, held that where the trial judge while exercising powers under Section 5 of the Arbitration Act makes an order which may be termed as a judgment within the meaning of Section 10 of the High Court Act, an appeal would be competent unless specifically barred. In the case before the High Court, it was held that the appeal was specifically barred being impermissible on the mere reading of Section 39 of the Arbitration Act.

8. We are unable to see the relevance of the Delhi High Court judgment to the matter before us. We have carefully gone through the Delhi High Court judgment in AIR 1983 Delhi 402. Apart from reading para 20 thereof, the Departmental Representative has not explained how the ratio of the decision is applicable to the case before us. In that case, the court was concerned with the question whether an appeal from a judgment of a Single Judge lay to the Division Bench having regard to the provisions of Delhi High Court Act and the Arbitration Act. We are unable to see the relevance of this case to the present matter. The Appellate Tribunal has been set up to hear appeals with respect to certain specified matters. In so far as the Customs Act and the Central Excises and Salt Act are concerned, the amendments brought about by the Finance (2) Act, 1980, not only conferred jurisdiction on the Tribunal to hear appeals but simultaneously took away the jurisdiction of the Central Government and Central Board of Excise and Customs as revisionary and Appellate authority. No similar amendments were made in the Produce Cess Act. Neither did the Finance Act (2) of 1980 confer jurisdiction on the Tribunal to hear appeals, nor did it take away the revisionary power of the Central Government to hear appeals against Orders-in-Appeal passed by the First appellate authority, as in the present case, under the Produce Cess Act. The provisions of Section 15(2) of the Produce Cess Act (extracted earlier) clearly provide that the provisions of the Central Excises and Salt Act and the rules made thereunder shall, so far as may be, apply in relation to the levy and collection of Produce Cess as they apply in relation to the levy and collection of duty payable to the Central Government under the Central Excises and Salt Act (emphasis supplied). The words "so far as may be" are significant in our view. The words mean that if there is any provision in the Produce Cess Act which conflicts with the provisions in the Central Excises and Salt Act, the former provision shall prevail. Applying this test, the revisionary authority continues to be the Central Government since Sub-section 4 of Section 10 has not been deleted and so long as this sub-section continues in the Produce Cess Act, and jurisdiction has not been conferred on the Tribunal, the Tribunal is not competent to hear revision applications filed before the Central Government under the Produce Cess Act.

9. In the above view of the matter, we are of the view that the revision application has been wrongly transferred to this Tribunal and, therefore, we direct that the records of the case shall be retransmitted to the revision authority in the Central Government for disposal in accordance with law.

10. M/s. Upper Ganges Sugar Mills Limited, Chandausi (hereinafter called the appellants) have been producing Ground Nut Oil from Ground Nuts in their oil Mill at Chandausi (District Bijnore). As per the provisions of the Produce Cess Act, 1966 (15 of 1966) which came into effect w.e.f. 6-4-1966, the appellants were bound to supply the particulars to the Central Excise Department and to submit monthly returns as required to be submitted under Section 8 of the Produce Cess Act, 1966 but they failed to comply with the provisions of Section 7 and 8 of Produce Cess Act, 1966 and Rule 54 of Central Excise Rules, 1944 read with Rule 15(2) of Produce Cess Act, 1966.

11. The excise authorities asked the appellants by writing various letters in the year 1971-72 to submit the required statements and to deposit amount of Oil Cess alleged to be due on the Ground Nut Oil produced by them. The appellants did not, however, take any action in the matter on the plea that the oil produced from the Ground Nuts by them did not come within the purview of the aforesaid Act. Thereafter, the excise authorities served a show cause notice dated 25-4-73 upon the appellants asking them as to why a sum of Rs. 21,753/- as oil cess due on 36254 quintals of oil produced by them be not recovered from them 12. The appellants sent a reply to the said show cause notice in which they admitted that they were crushing ground nuts in their factory but as per the decision of the Madhya Pradesh High Court and the Punjab High Court the ground nut is not an oil seed and, therefore, they did not comply with the provisions of the Produce Cess Act, 1966. It was also alleged that the Government made the appointment of the Collector for the purpose of Cess Act only vide notification dated 26-3-1969 and as such it was not possible for them to file any return prior to that.

13. The Assistant Collector of Central Excise, Rampur by his order dated 16-8-1977 held that the appellants had contravened the provisions of Sections 7 and 8 of the Produce Cess Act, 1966 and he imposed a penalty of Rs. 250/- and also confirmed the demand of the Oil Cess due on 36254 quintals of oil at the appropriate rate. The Appellate Collector, before whom the appeal was preferred by the appellants against the order of the Assistant Collector of Central Excise, confirmed the order of the Assistant Collector and rejected the appeal filed by the appellants.

14. Aggrieved by the said order of the Appellate Collector, the appellants filed a revision application before the Government of India, Department of Revenue, New Delhi, which was transferred to this Tribunal and is treated as an appeal.

15. After hearing Shri J. Bannerjee, Advocate for the appellants and Shri A. S. Sundar Rajan, J.D R. for the department and going through the record, the matter was adj urned for announcement of orders but before the orders could be announced, a point cropped up whether this Tribunal is the proper forum for the disposal of this matter or the revisional authority in the Central Government is to hear the revision itself and hence the notice was issued to the parties to advance arguments on this point also. We, therefore, reheard Shri J. Bannerjee, Advocate for the appellants and Shri A. S. Sundar Rajan, J.D.R. for the department on this point.

16. Mr. Bannerjee, as well as Mr. Sundar Rajan, did not dispute the jurisdiction of this Tribunal to hear this appeal as a transferred matter. Shri Sundar Rajan further pointed out that the Produce Cess Act, 1966 (15 of 1966) provides for the levy and collection as a cess, on every produce, specified in Column 2 of the Second Schedule to the Act, a duty of excise at such rate not exceeding the rate specified in the corresponding entry in Column 3 thereof, as the Central Government, may by notification in the Official Gazette, specify. According to him, Produce Cess Act must be deemed to have been repealed by implication to the extent that the Tribunal was empowered to hear appeals against the orders passed by the Appellate Collector of Central Excise and to disposal of transferred revision applications as appeals. He also cited a decision of Delhi High Court reported in AIR 1983 Delhi 402 in support of his contention.

17. Though Mr. Bannerjee, Ltd. counsel for the appellants did not dispute this legal proposition but to dispose of this point, we have to consider the relevant provisions of Produce Cess Act, 1966 (15 of 1966). Section 3(2) provides for the levy and collection as a cess, on every produce, specified in Column 2 of the Second Schedule to the Act, a duty of excise at such rate not exceeding the rate specified in the corresponding entry in Column 3 thereof, as the Central Government may, by notification in the Official Gazette, specify. Section 9 provides for the assessment of the Cess on the basis of returns filed by the assessee. Section 10(1) provides for appeals against assessments made under Section 9 to such appellate authority as the Central Government may, by notification in the Official Gazette, appoint in this behalf.

Sub-section 4 of Section 10 provides that the Central Government may on the application of any person aggrieved by any order made by the Appellate Authority under Section 10(1) or Section 3 cancel or modify such order, if such application is made within six months from the date of the order made under Sub-section 1 or Sub-section 3.

18. There is no dispute about the fact that under the provisions of Produce Cess Act, 1966 which came into effect w.e.f. 6-4-1968, the Government appointed the Collector Central Excise as the Collector under the Act vide notification dated 26-3-1969 and it is the Collector Central Excise who has to act as an authority under the Act. Section 15(2) of the Produce Cess Act reads as under :- "The provisions of the Central Excises and Salt Act, 1944 (1 of 1944), and the rules made thereunder, including those relating to refunds and exemptions from duty, shall so far as may be, apply in relation to the levy and collection of duties of excise on any produce specified in the Second Schedule as they apply in relation to the levy and collection of duty payable to the Central Government under that Act." A perusal of the provisions contained in this sub-section shows that for all intents and purposes, the provisions of Central Excises and Salt Act, 1944 and the rules made thereunder are to be applied in the cases under the Produce Cess Act, 1966. The Central Excises and Salt Act, 1944 was amended by the Finance Act, 1980 and as per amended provisions of Section 35B of the Central Excises and Salt Act, such appeals against the orders of the Collector (Appeals) are to be heard by the Tribunal. Therefore, as per the provisions of Section 15(2) of the Produce Cess Act, the provision of the Central Excises and Salt Act as amended would be applicable in this matter and as such this Tribunal is competent to hear the appeals against the orders under the Produce Cess Act, 1966 passed by the Appellate Collector or Collector (Appeals) Central Excise as a competent authority under the Act.

19. On merits, Shri Bannerjee, Ld. counsel for the appellants submitted that they were given to understand that the ground nut was not an oil seed as held by the Hon'ble High Courts of Madhya Pradesh and Punjab in their judgments delivered in the years 1956 and 1957 and, therefore, the appellants did not submit any returns required to be submitted by the crushers of oil seeds and producers of oil therefrom as required under the provisions of Produce Cess Act, 1966.

20. He also submitted that though the Produce Cess Act, 1966 had come into effect w.e.f. 6-4-1966 but the Government made appointment of the Collector for the purpose of the Cess Act only vide notification dated 26-3-1969 and as such it was not possible to file the return prior to that. He also took up the plea that the duty demanded is time-barred under Rule 10 of the Central Excise Rules.

21. Shri Sundar Rajan, J.D.R. countered the arguments of the learned counsel of the appellants and submitted that ignorance of law is no excuse. According to him, the appellants have not been able to cite any decision of any High Court of India to show and prove that ground nut is not an oil seed and that oil produced from the ground nut crushed by them does not come within the purview of the Produce Cess Act, 1966. He further submitted that it was the duty of the appellants to submit the particulars of such oil extraction from the oil seed to the excise authorities and also to submit the monthly returns as required to be submitted under Sections 7 and 8 of the Produce Cess Act, 1966 but they failed to do so despite the fact that the Inspector of Central Excise, Chandausi, asked them in writing in the year 1971-72 when he came to know about this oil extraction from the oil seeds, to submit the required statements and to deposit the amount of oil cess alleged, to be due on the ground nut oil produced by them. As per the submission of Shri Sundar Rajan, the appellants did not pay any heed to comply with the provisions of the Produce Cess Act, 1966 and ultimately a show cause notice dated 25-4-1973 was served upon them and despite that they did not comply with the provisions of the said Act. They are liable to pay the cess duty as well as the penalty as adjudged by the authorities below and that the claim is within time. According to him, Rule 9, which was having no time of limitation at the relevant time, is applicable in this case. The provisions of Rule 10 as alleged by the learned counsel of the appellants cannot be made applicable in this case.

22. There is no dispute about the fact that the appellants produce the oil from the ground nuts crushed by them. The learned counsel of the appellants has also not been able to satisfy us as to show the ground nut seeds are not the oil seeds. At the time of arguments he rather conceded that the ground nut seeds are the oil seeds but according to him the appellants did not submit any return required to be submitted by crushers of oil seeds and producers of oil therefrom as required under the provisions of the Produce Cess Act, 1966 because they were given to understand at that time that ground nut was not an oil seed.

Ignorance of law is not an excuse and the appellants can-not take the benefit of their ignorance about the fact that the ground nut was not an oil seed. They were bound to submit the particulars and the monthly returns as per the provisions of Sections 7 and of the Produce Cess Act, 1966 which were in operation at the relevant time.

23. The plea of the learned counsel for the appellant that they could not have filed the returns till 26-3-1969 when there was no Collector appointed for that purpose, is also not tenable in the present circumstances of the case. From the very beginning the case of the appellants is that they did not comply with the provisions of the Produce Cess Act, 1966 because they were under the impression that they were not covered by the provisions of the aforesaid Act. It is for the first time in the reply to their show cause notice on 21-5-1973 that the appellants mentioned that the Collector was appointed under the Act only on 26-3-1969 and as such it was not possible to file any return prior to that. A perusal of the record shows that even after 26-3-1969 the appellants did not submit any return despite the written notice sent by the excise authorities in the year 1971-72. Besides this, when the Produce Cess Act had come into operation, it was incumbent upon the appellants to comply with the provisions of the said Act, no matter any Collector had been appointed or not under the provisions of that Act.

The appellants did not take any step at any time to comply with the provisions of this Act. This plea now taken by the appellants does not help them at all.

24. The last submission made by the learned counsel of the appellants that it is a case of non-levy of duty and, therefore, the demand is barred under Rule 10 of the Central Excise Rules, 1944, is also not tenable in the present case. As per the facts on record, the goods were removed from the factory premises by the appellants without the knowledge of the excise authorities and without payment of any duty amount. They also did not submit the particulars and the monthly returns as required under Sections 7 and 8 of the Produce Cess Act, 1966. This case is covered by the provisions of Rule 9 which was prevalent at that time. Rule 9 reads as under : "No excisable goods shall be removed from any place where they are produced, cured or manufactured, or any premises apparent thereto, which may be satisfied by the Collector in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed under these rules or as the Collector may require and accept on presentation of an application in the proper form and on obtaining the permission of proper officer on the form." 25. If the provisions of this Rule 9(1) of the Central Excise Rules, 1944 are violated, the provisions of Rule 9(2) come into operation immediately which lay down that if any excisable goods are, in contravention of Sub-rule (1), deposited in or removed from, any place specified therein, the producer or manufacturer thereof, shall pay the duty leviable on such goods upon written demand made by the proper officer whether such demand is delivered personally to him or is left at his dwelling house and shall also be liable to a penalty which may extend to Rs. 2,000/ and such goods shall be liable to confiscation.

26. No time-limit was prescribed under Rule 9 at the relevant time. As the appellants violated the provisions of Rule 9(1), so under Rule 9(2) of the Central Excise Rules, 1944 the demand of duty is within time.

The appellants cannot take any benefit out of the decision of Madras High Court in Murugan & Co., Pudukottai v. Deputy Collector of Central Excise, Tiruchirapalli and other (1977 E.L.T. J 193) because the facts in that case were different from the facts in the present ease before us. In that case their Lordship of the Madras High Court held that Rule 9(2) cannot be invoked where the excise authorities entertain of a doubt as to whether the goods are excisable or not and did not object to the clearance of the goods without payment of duty. Here the appellants removed the goods without the knowledge of the excise authorities and there was no question of entertaining a doubt by the excise authorities as to whether the goods were excisable or not and that they did not object to clearance of those goods without payment of duty. The decision of this Tribunal in Rishi Enterprises, Bombay v.Collector of Central Excise, Bombay [1984 (15)E.L.T. 260] relied upon by appellants also does not help the appellants in the present case. In that case Special Bench 'D' of the Tribunal found that the goods were removed within the knowledge of the excise authorities and the excise authorities did not take any step to collect the duty amount and in those circumstances it was held that the provisions of Rule 9(2) would not be applicable in that case but here in the case before us the appellants removed the goods without the knowledge and consent of the excise authorities and the excise authorities were never a consenting party in getting the goods removed without payment of duty.

27. Under these circumstances, we find no merit in this appeal. The same is hereby dismissed.


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