1. The appellants M/s. Nasiruddin Biri Merchants Limited had warehoused tobacco on 22-1-1979 and 23-5-1978, these quantities having been originally warehoused on 2-2-1976 for a period of three years. In respect of these two items warehoused the appellants had made applications for extension of the warehousing period by one year under applications dated 22-1-1979 and 9-10-1978 respectively. But they had received two demands both dated 2-2-1979 demanding payment of duty of Rs. 2373.93 and Rs. 39132.78 respectively from the concerned Inspector.
They represented to the Assistant Collector of Central Excise, Patna for withdrawal of these demands under application dated 10-5-1979 pointing out that they had already made applications for extension of warehousing period and the demands had been received even before the disposal of the said applications. They had further pointed out therein that as under the budget for 1979 the Central Excise duty on tobacco had been withdrawn no duty was also payable by them. But the Assistant Collector under his letter dated 31-3-1980 rejected the said contentions and directed them to pay the duty as demanded. Their appeal to the Appellate Collector of Central Excise, Calcutta was dismissed by order dated 24-9-1980. It is their revision petition to the Government against the said order that, on transfer, is being disposed of as an appeal under this order.
2. We have heard Shri N. Mookherjee, Advocate for the appellants and Sri H.L. Verma, Senior Departmental Representative for the respondent.
3. Shri Mookherjee pointed out that the two demands (pages 8 and 9 of the paper book) were both addressed to the Chief Accounts Officer, Central Excise, Patna and not to the appellants and for that reason itself the demands were not valid. But it may be noted that when they sent their reply dated 10-5-1979 to the Asstt, Collector they did not raise any such contention but on the other hand proceeded on the basis that the demands were addressed to them and related to the tobacco warehoused by them. The objection now raised had not been raised even before the Appellate Collector. Therefore we hold that the objection as mentioned above is not sustainable, the mistake evidently having been one due to oversight on the part of the authorities who issued the demand.
4. Shri Mookherjee then contended that the demands had been issued even when the applications for extension of the warehousing period were pending and for that reason also the demands were invalid. As mentioned earlier the goods had been first warehoused on 2-2-1976 for a period of three years and the said period therefore came to an end by 1-2-1979.
It was on that basis that the demands had been issued for payment of duty as on 2-2-1979, on the expiry of the warehousing period. But there is no dispute that the appellants had made applications for extension of the warehousing period by one year, the applications for extension being dated 22-1-1979 and 9-10-1978 respectively. It does not also appear from the records that any specific orders had been passed on these applications for extension. It is not clear whether the demands dated 2-2-1979 had been issued after the Collector had rejected the applications for extension. But it appears to us that it is unnecessary to pursue this matter further in view of the legal position arising by reason of the amendment of the relevant rule.
5. The rule relevant is Rule 145 of the Central Excise Rules. As it originally stood the goods could be warehoused for an initial period of three years with extension for a further period of one year at the discretion of the Collector and also a further extension of one year under orders of the Collector with further extensions also being permissible by the Central Board. The rule underwent amendment under Notification No. 291/76, dated 21-12-1976. Under Notifications No. 9/77 and 11/77 both dated 25-1-1977 the amendment so far as it related to Rule 145 was to come into effect from 1-4-1977. tinder the said amendment the initial period of warehousing was reduced to a period of two years so far as tobacco is concerned with a discretion being granted to the Collector to extend it by a period of one year only thereafter. Therefore on and after 1-4-1977 the total period of warehousing, so far as tobacco is concerned, could be only a period of three years even if the Collector felt there are grounds for extending the initial period of warehousing. In that event in respect of the applications dated 9-10-1978 and 22-1-1979 made by the appellants the Collector would not be entitled to grant any extension beyond the period of three years for which the tobacco had been already warehoused. That would mean that the applications were liable for automatic rejection.
6. But Slid Mookherjee contends that the goods having been warehoused when the rule as unamended was in force it would be that rule that would govern the period of warehousing and not the amended rule. In this connection he wanted to make reference to a letter dated 16-5-1977 by the Asstt. Collector of Central Excise, Patna to the Collector of Central Excise, Patna and a reply thereto dated 30-5-1977, the purport of this correspondence being to confirm the presumption of the Asstt.
Collector that in respect of tobacco which had been warehoused on or before 3-4-1977 the initial period as well as that of extension would be as under the original rule. It is not clear as to how the appellants have produced copies of these letters, the copies also not being attested copies. But we are not convinced that the contention of Shri Mookherjee is wholly correct. So far as the initial period of warehousing in respect of tobacco warehoused before 1-4-1977, it would be true that if the initial period had been granted as three years which was to expire subsequent to 1-4-1977 the same could not be reduced to two years because of the amendment which came into effect on 1-4-1977. But that would be on the basis that the period already granted under the original permission could not be reduced by reason of the amendment introduced subsequently. But so far as applications for extension arc concerned it may be noted that the extension was not mandatory but could be granted or refused at the discretion of the Collector. Further, applications for extension, if made subsequent to the amendment of the rule, will have to be dealt with only with reference to the rule as it stood on the date of the applications for extension and not with reference to the rule as it stood before the amendment. The applications cannot be claimed to be dealt with retrospectively, ignoring the amendment which had come into force before the applications for extension.
7. Shri Mookherjee further contended that the issue of the two demands without a prior issue of a show cause notice was not valid and, therefore, the subsequent confirmation of the demand by the Assistant Collector was also not valid. But it should be noted that the full period of 3 years of warehousing having expired by 1-2-79 the authorities were entitled to demand the duty on 2-2-1979 and, therefore, such a demand was not required to be preceded by a show cause notice. It may be noted that the quantum of the tobacco, or the duty payable thereon as on 2-2-79, was not at any time disputed by the appellants, their claim being that by virtue of subsequent events no duty became payable if duty was to be paid as on the date of the confirmation of the demand by the Assistant Collector.
8. Shri Mookherjee had also contended that principles of natural justice had been violated in the adjudication proceedings and for this reason also the orders of the lower authorities were to be set aside.
The basis for this argument was the reasons earlier discussed, that is, the demands were not addressed to the appellants and that no show cause notice had preceded the issue of the demands. For the reasons stated earlier we have held that these two contentions are themselves not valid, therefore, the contention of violation of principles of natural justice does not also require any further consideration.
9. In the circumstances, on a careful consideration of the submissions of both sides, we hold that the orders of the lower authorities do not require any interference. This appeal is accordingly dismissed.